Ironshore Specialty Ins. Co. v. Conemaugh Health Sys.
| Decision Date | 16 May 2022 |
| Docket Number | Civil Action 3:18-cv-153 |
| Parties | IRONSHORE SPECIALTY INSURANCE COMPANY, Plaintiff and Counterclaim Defendant, v. CONEMAUGH HEALTH SYSTEM, INC., Defendant Counterclaim Plaintiff/ Third Party Plaintiff, and JOHN O. CHAN, M.D., Defendant, v. PROSELECT INSURANCE COMPANY, Third Party Defendant. |
| Court | U.S. District Court — Western District of Pennsylvania |
This is an insurance dispute arising out of a medical malpractice case[1] against Conemaugh Health System, Inc. and John O. Chan, M.D. (collectively "Conemaugh"). Pending before the Court is Defendant Conemaugh's Motion for Summary Judgment against Plaintiff Ironshore Speciality Insurance Company ("Ironshore"). (ECF No. 174). Also pending before the Court is Counterclaim Defendant Ironshore's Motion for Partial Summary Judgment against Counterclaim Plaintiff Conemaugh. (ECF No. 173).
Additionally, pending before the Court is Third-Party Defendant ProSelect Insurance Company's ("ProSelect" or "Coverys")[2] Motion for Summary Judgment against Third-Party Plaintiff Conemaugh. (ECF No. 171). Also pending before the Court is Third-Party Plaintiff Conemaugh's Motion for Summary Judgment against Third-Party Defendant ProSelect. (ECF No. 172). .
The Motions are fully briefed (see ECF Nos. 176, 183, 190, 194, 217, 221, 225, 242, 243, 247, 248, 251, 255-1, 259) and ripe for disposition.
For the reasons that follow, Conemaugh's Motion for Summary Judgment Against Ironshore (ECF No. 174) is DENIED. Ironshore's Motion for Partial Summary Judgment Against Conemaugh (ECF No. 173) is GRANTED. ProSelect's Motion for Summary Judgment Against Conemaugh (ECF No. 171) is GRANTED. Conemaugh's. Motion for Summary Judgment Against ProSelect (ECF No. 172) is DENIED.
The Court has jurisdiction over this action because the parties are diverse and the amount in controversy exceeds $75, 000. 28 U.S.C. §§ 1332, 1367 and FED. R. ClV. P. 14.
Venue is proper in the Western District of Pennsylvania because a substantial part of the events giving rise to this action occurred in the Western District of Pennsylvania. 28 U.S.C. § 1391.
MEMORANDUM OPINION AND ORDERThis is an insurance dispute arising out of a medical malpractice case[1] against Conemaugh Health System, Inc. and John O. Chan, M.D. (collectively "Conemaugh"). Pending before the Court is Defendant Conemaugh's Motion for Summary Judgment against Plaintiff Ironshore Speciality Insurance Company ("Ironshore"). (ECF No. 174). Also pending before the Court is Counterclaim Defendant Ironshore's Motion for Partial Summary Judgment against Counterclaim Plaintiff Conemaugh. (ECF No. 173).
Additionally, pending before the Court is Third-Party Defendant ProSelect Insurance Company's ("ProSelect" or "Coverys")[2] Motion for Summary Judgment against Third-Party Plaintiff Conemaugh. (ECF No. 171). Also pending before the Court is Third-Party Plaintiff Conemaugh's Motion for Summary Judgment against Third-Party Defendant ProSelect. (ECF No. 172).
The Motions are fully briefed (see ECF Nos. 176, 183, 190, 194, 217, 221, 225, 242, 243, 247, 248, 251, 255-1, 259) and ripe for disposition.
For the reasons that follow, Conemaugh's Motion for Summary Judgment Against Ironshore (ECF No. 174) is DENIED. Ironshore's Motion for Partial Summary Judgment Against Conemaugh (ECF No. 173) is GRANTED. ProSelect's Motion for Summary Judgment Against Conemaugh (ECF No. 171) is GRANTED. Conemaugh's Motion for Summary Judgment Against ProSelect (ECF No. 172) is DENIED.
The Court has jurisdiction over this action because the parties are diverse and the amount in controversy exceeds $75, 000. 28 U.S.C. §§ 1332, 1367 and FED. R. CIV. P. 14.
Venue is proper in the Western District of Pennsylvania because a substantial part of the events giving rise to this action occurred in the Western District of Pennsylvania. 28 U.S.C. § 1391.
The following facts are undisputed unless otherwise noted.[3]
The factual background and procedural posture of this case are complex and extensive.
The Court recounts the factual and procedural record in significant depth in order to provide necessary background. Ironshore filed its Complaint[4] in this case after a jury returned a verdict of $47, 033, 579-which this Court subsequently remitted to $19, 283, 579-in another lawsuit against Conemaugh.
At the times relevant to this lawsuit, Conemaugh purchased the following insurance policies from ProSelect: (1) ProSelect Primary HPL, Policy No. 2-25167HPL, with limits of $500, 000 per claim and $2, 500, 000 in the aggregate; (2) ProSelect Primary Practitioners (MD), Policy No. 2-25167MD, with limits of $500, 000 per claim and $1, 500, 000 in the aggregate; and (3) ProSelect First-Layer Excess Policy, 2-25167CA, with limits of $10, 000, 000 per claim and in the aggregate (collectively, the "Primary Policy"[5]). (ECF No. 196 at Exhibits 1, 2, and 3). The Primary Policy provided a total coverage limit of $11, 000, 000. (Id.).
The Primary Policy was effective for claims made against Conemaugh between January 1, 2014, and January 1, 2015.[6] (Id.). Conemaugh had an additional $1, 000, 000 in coverage under the Medical Care Availability and Reduction of Error Act ("MCARE" or "the Act"), for a total underlying coverage amount of $12, 000, 000 (the "Underlying Coverage Amount"). (ECF No. 195 at ¶ 4). In addition to the Primary Policy and MCARE, Conemaugh purchased a follow-form excess insurance policy from Ironshore (the "Ironshore Policy") that covered claims exceeding the Underlying Coverage Amount. (ECF Nos. 195 at ¶ 5; 218 at ¶ 5). The Ironshore Policy was effective for claims made between January 1, 2014, and January 1, 20157 (ECF No. 196 at Exhibit D-4).
The Ironshore Policy at issue contains several provisions relevant to this lawsuit. First, the Ironshore Policy states that Ironshore will pay claims in excess of the Underlying Coverage Amount so long as Conemaugh follows the necessary conditions (the "Exhaustion Clause[7]):
[Ironshore] shall pay on behalf of [Conemaugh] for loss, damages, settlements and defense expenses by reason of exhaustion of the limits of liability of the [Primary Policy] by the issuers of such [Primary Policy] and/or [Conemaugh], subject to: (1) the terms and conditions of the Primary Policy (as submitted to [Ironshore]), (2) the Limit of Liability stated in H EM 3 of the Declarations, and (3) the terms and conditions of, and all endorsements attached to, this Policy
Second, the Ironshore Policy contains a provision requiring Conemaugh to cooperate with Ironshore in the investigation, settlement, or defense of a claim- if Ironshore elects to be involved- and make available all information and records Ironshore may reasonably require (the "Election and Cooperation Clause"):
[Ironshore] may, at its sole discretion, elect to associate in the investigation, settlement, or defense of any claim against [Conemaugh], even if the Underlying [Coverage Amount] has not been exhausted. If [Ironshore] so elects, [Conemaugh] will cooperate with [Ironshore] and will make available all such information and records, as [Ironshore] may reasonably require.
(ECF No. 196 at Exhibit D-4, Ironshore Policy § VH(B)).
Third, the ProSelect Primary HPL, Policy No. 2-25167HPL, to which the Ironshore Policy follows form, contains a "Known Claims and Circumstances" clause ("Known Claims and Circumstances Clause") stating that:
This POLICY does not apply to any liability of [Conemaugh] or to any DAMAGES, INCIDENTS, CLAIMS, SUITS, or LICENSING PROCEEDINGS: ... That was not disclosed to U.S. in the POLICY APPLICATION or in any application submitted to U.S. for prior acts or retroactive coverage and the INSURED or the NAMED INSURED knew or should have known that such INCIDENT, circumstance or situation had the potential to give rise to a CLAIM covered by this POLICY.
(ECF No. 196 at Exhibit D-l, ProSelect Primary HPL Policy § VI(10)(b)(iii)). The term "POLICY APPLICATION" is further defined as meaning:
...[E]ach application, together with all attachments and other documents submitted to [ProSelect] by or on behalf of the FIRST NAMED INSURED in connection with the underwriting or issuance of this POLICY, including any endorsement.
(Id. at ProSelect Primary HPL Policy § VII(14)). The Ironshore Policy further defines "Application" as meaning, "any application furnished to the Underwriter, and all other statements made and information furnished to the Underwriter and to the issuer(s) of the Underlying Insurance, whether directly or through public filing." (Id. at Exhibit D-4, Ironshore Policy § m(A)) (emphasis included).
On October 29, 2015, Conemaugh and Dr. Chan, among others, were named as Defendants ("Harker Defendants") in Harker v. Chan, No. 3:15-cv-277, before the Court, (see Harker, [8] ECF No. 1). The obligation to pay the settlement in the Harker Case provides the basis for the dispute in this case. The Harkers' Complaint ("Harker Complaint") pleaded that Conemaugh and Dr. Chan were responsible, as a result of negligent medical treatment, for the permanent disfigurement of a premature infant, GH, [9] born XXXXX. (Id.).
Harker arose from an allegation that Conemaugh, through Dr. Chan had negligently treated GH, a prematurely born girl, by wrapping her head with an ACE bandage shortly after birth, causing permanent disfigurement to her face and scalp. (Harker, ECF No. 96 at 1). GH was born at Conemaugh Memorial Medical Center, one of...
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