Medical Malpractice Ins. Ass'n v. Medical Liability Mut. Ins. Co.

• Decision Date: 18 May 1982
• Citation: 86 A.D.2d 476,450 N.Y.S.2d 191
• Parties: MEDICAL MALPRACTICE INSURANCE ASSOCIATION, Plaintiff-Appellant, v. MEDICAL LIABILITY MUTUAL INSURANCE COMPANY, Defendant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 191

450 N.Y.S.2d 191

86 A.D.2d 476

MEDICAL MALPRACTICE INSURANCE ASSOCIATION, Plaintiff-Appellant, v. MEDICAL LIABILITY MUTUAL INSURANCE COMPANY, Defendant-Respondent.

Supreme Court, Appellate Division First Department.

May 18, 1982.

Norman Bard, P. C., Garden City, for plaintiff-appellant.

Howard R. Cohen, New York City, of counsel (Barry G. Saretsky, New York City, with him on the brief; Bower & Gardner, New York City, attorneys), for defendant-respondent.

Before MURPHY, P. J., and KUPFERMAN, SULLIVAN, CARRO and LUPIANO, JJ.

SULLIVAN, Justice.

On December 5, 1976 Daniel Rockwell was admitted to the cardio-pulmonary service of the Upstate Medical Center, State University of New York, which is maintained by the State of New York. The next day he underwent a surgical procedure during the course of which, while under anesthesia, he suffered cardiac arrest with resultant brain damage.

In July 1977, Rockwell, an adult incapable of prosecuting his rights, by his father and natural guardian, commenced a malpractice action in the Court of Claims against the State of New York. Among the doctors identified in a bill of particulars as having negligently participated in the surgical procedure was Dr. Frederick Parker, while Dr. Roland Couche was named as one of two anesthesiologists involved. Both doctors were employed by the State and assigned to the Upstate Medical Center.

At the time of the surgery the State University of New York, Upstate Medical Center was the named insured under a Hospital Professional Liability Insurance policy with $1,000,000/$3,000,000 limits issued by plaintiff Medical Malpractice Insurance Association (MMIA). Since coverage was extended to physicians and surgeons employed by the Upstate Medical Center both Dr. Parker and Dr. Couche were covered under MMIA's policy as additional insureds. ¹ MMIA undertook the defense of the Court of Claims action in which only the State of New York was named as a defendant. ² Doctors Parker and Couche were also individually insured under separate, but identical, policies of medical malpractice liability insurance with $1,000,000/$3,000,000 limits underwritten by defendant Medical Liability Mutual Insurance Company (MLMIC). The doctors' policies did not cover the State of New York or the Upstate Medical Center.

On or about November 7, 1979, MMIA, citing the "substantial involvement and exposure of both of your insureds in this matter", invited MLMIC to participate in negotiating a settlement of the Court of Claims action against MMIA's insured, "the Upstate Medical Center and the State of New York." MLMIC, which had opened its own file and had conducted an independent investigation as early as August 1977, declined. On November 28, 1979, MMIA settled the Court of Claims action for the sum of $750,000. ³ Pursuant to the order approving the settlement, the State of New York received a stipulation of discontinuance and releases in exchange for its payment of the agreed amount.

MMIA thereafter commenced an action against MLMIC, alleging that MLMIC was obligated to contribute such proportion of the settlement and legal fees and disbursements as purportedly represented the percentage of responsibility attributable to Doctors Parker and Couche. After MLMIC interposed an answer, which included several affirmative defenses, MMIA moved for partial summary judgment limiting the issues for trial (CPLR 3212) and for summary judgment dismissing the affirmative defenses (CPLR 3211(a)(b), (c)). Special Term granted MLMIC's cross-motion for summary judgment dismissing the complaint, from which determination this appeal is taken. We affirm.

MMIA rests its claim for the recovery of that portion of the settlement which it allegedly paid on behalf of Doctors Parker and Couche on the ground that, since MMIA and MLMIC were concurrent insurers, they must apportion the loss between them in accordance with the "other insurance" clauses of their respective policies, by the clear language of which MMIA was the excess and MLMIC the primary insurer. ⁴ Thus, MMIA argues, since it made a payment which should have been made by MLMIC, it has an equitable right to contribution. MMIA also seeks to enforce the rights of its insureds, both the State of New York and Doctors Parker and Couche, to which it became equitably subrogated as a result of discharging their legal obligations.

Before the insurer of one policy may enforce a right of contribution against another insurer on the ground of concurring coverage, the insurance provided by each must cover "the same interest and against the same risk." (Continental Ins. Co. v. Commercial Union Ins. Co., 27 A.D.2d 333, 336, 278 N.Y.S.2d 995.) The risk at issue was the malpractice claim and the State's potential liability therefor. MLMIC covered the liability of Doctors Parker and Couche, but not the liability of either the State of New York or the State University, Upstate Medical Center. Only MMIA's policy covered the State, the only defendant in the underlying medical malpractice action, as well as the only party against whom Rockwell asserted a claim. Thus, MMIA and MLMIC were not concurrent insurers.

The cases cited by MMIA in support of its argument are inapplicable. In General Acc. Fire and Life Assur. Corp. v. Piazza, 4 N.Y.2d 659, 176 N.Y.S.2d 976, 152 N.E.2d 236, for example, where the loss was apportioned in accordance with the other insurance clauses of the respective policies, each policy contained an omnibus clause extending coverage to any person lawfully using the insured motor vehicle and any party legally responsible for its use. Thus, unlike here, the defendants in the underlying personal injury action were insured under both policies.

Similarly, in Matter of Country-Wide Ins. Co. v. Wagoner, 45 N.Y.2d 581, 412 N.Y.S.2d 106, 384 N.E.2d 653, where both policies covered the uninsured motorist claim of a motorcyclist injured by a hit-and-run driver, recourse was had to the other insurance clauses to determine whether the respective policies were applicable on a pro rata or a primary-excess basis. (See, also, Argonaut Ins. Co. v. Continental Ins. Co., 63 A.D.2d 927, 406 N.Y.S.2d 96.)

MMIA also argues that by settling the malpractice action it became subrogated to any rights of the State of New York and of Doctors Parker and Couche. Subrogation "has been called 'the mode which equity adopts to compel the ultimate payment of a debt by one who in justice, equity, and good conscience ought to pay it.' " (Pittsburgh-Westmoreland Coal Co. v. Kerr, 220 N.Y. 137, 144, 135 N.Y.S. 1088.) An equitable doctrine, subrogation recognizes a right of recovery where "one party pays a debt for which another is primarily answerable and which in equity and good conscience should have been discharged by the latter, so long as the payment was made either under compulsion or for the protection of some interest of the party making the payment, and in discharge of an existing liability." (Gerseta Corporation v. Equitable Trust Co., 241 N.Y. 418, 425-6, 150 N.E. 501, citing Seldon on Subrogation pp. 2, 4.)

A subrogee, however, acquires no greater rights than the one in whose stead it is substituted. (State Bank of Albany v. Dan-Bar Contracting Co., 12 A.D.2d 416, 418, 212 N.Y.S.2d 386, aff'd 12 N.Y.2d 804, 235 N.Y.S.2d 835, 187 N.E.2d 19.) Since the State was not covered by MLMIC's policies, ⁵ it does not have any rights thereunder with respect to the Rockwell claim to which MMIA could be subrogated. Nor may MMIA, as the State's subrogee, attempt to hold MLMIC liable on the basis of any claim that the State may have asserted against its negligent employees, MLMIC's insureds, Doctors Parker and Couche, for contribution ⁶, since the State has been released from liability by Rockwell. "A tortfeasor who has obtained his own release from liability shall not be entitled to contribution from any other person." (General Obligations Law § 15-108[c].)

MMIA's claimed status as the subrogee of Doctors Parker and Couche cannot withstand scrutiny either, since, as already noted, the doctors were not parties to the underlying malpractice action, and thus had no legal obligations which MMIA could have discharged. ⁷ Indeed, the doctors were not even named in the releases executed as part of the settlement.

Even if a factual basis existed to support MMIA's claim to be the subrogee of Doctors Parker and Couche, its claim would still fail in the absence of any showing of a breach by MLMIC of any obligations MLMIC owed to the doctors under its policies. If the doctors, as MLMIC's insureds, have no claim against it for breach of any obligation under the policy, then neither has MMIA, as their purported subrogee.

The MLMIC policy issued to both Doctors Parker and Couche obligated the insurer "pay on behalf of...