Medical Mut. Liability Ins. Soc. of Maryland v. Evans

Decision Date01 September 1992
Docket NumberNo. 67,67
Citation330 Md. 1,622 A.2d 103
CourtMaryland Court of Appeals

David A. Levin and Jack L. Harvey (Wharton, Levin, Ehrmantraut, Klein & Nash, all on brief) Annapolis, for petitioner.

Marvin Ellin (LaVonna L. Vice, Ellin & Baker, all on brief) Baltimore, for respondent.



Occasionally cases arise in which a trial court's denial of a motion for mistrial constitutes an abuse of discretion. This is such a case. It is a claim against a liability insurer for bad faith failure to settle.

The action was brought in 1989 in the Circuit Court for Baltimore City by the respondent, Deborah L. Evans (Evans), against the petitioner, Medical Mutual Liability Insurance Society of Maryland (Med Mutual). Evans sued as the assignee of Med Mutual's insured, Clarence E. Beverly, M.D. (Beverly), an anesthesiologist. In a 1988 medical malpractice trial, Evans had obtained a jury verdict and judgment for $2.5 million against Beverly. Thereafter, Beverly's malpractice insurer, Med Mutual, paid Evans the limits of Beverly's policy of $1 million, plus interest thereon. Beverly assigned to Evans his bad faith claim against Med Mutual. One of Med Mutual's contentions before this Court is that that assignment is invalid.

The first trial of the instant action aborted by a mistrial caused by improper questioning of a plaintiff's witness by counsel for Evans. At the retrial Med Mutual again moved for a mistrial, this time based on improper cross-examination by Evans's counsel of a witness called by Med Mutual. The mistrial was denied. Our principal holding addresses that ruling. On retrial the jury verdict was in favor of Evans against Med Mutual, and judgment was entered for the entire amount by which the judgment in Evans v. Beverly exceeded policy limits, that is, for $1.5 million plus accumulated interest on that amount. In this Court Med Mutual also argues that this measure of damages was erroneous.

Med Mutual appealed to the Court of Special Appeals. 1 The Court of Special Appeals affirmed. Medical Mut. Liability Ins. Soc'y v. Evans, 91 Md.App. 421, 604 A.2d 934 (1992). This Court then granted Med Mutual's petition for certiorari which raised the three issues indicated above.

Underlying this failure to settle action is a medical malpractice claim that arose out of the following circumstances. In 1983 Evans, then age thirty-five, was an award-winning public school teacher in Baltimore City. On September 17 of that year she entered Lutheran Hospital (Lutheran) for the removal of an IUD that had extravasated into the intraperitoneal cavity. Evans was placed under general anesthesia for the surgery. Beverly was the anesthesiologist. The IUD was located through laparoscopy, but could not be extracted through the scope, requiring that a five centimeter incision be made in the abdomen. The entire procedure required in excess of three hours. Evans had a delayed response in awakening. She was discharged from Lutheran on September 22, 1983 "in good condition," per the summary. That night Evans was admitted to Baltimore County General Hospital with focal right-sided seizures, which she described as occurring intermittently. She was discharged on October 5, 1983, clinically improved, but apparently without any determination of the cause of the condition.

Evans's condition declined. She developed a tremor in the right arm and hand, with numbness and weakness. Her thinking processes and ability to concentrate were impaired. She could no longer teach school and, for Social Security purposes, she was determined to be totally disabled.

Claim was made by Evans against Beverly in Health Claims Arbitration. 2 In the opinion of medical experts who were expected to testify for Evans, she had suffered a brain injury caused by a lack of oxygen in the course of the surgery at Lutheran. That hypoxia, in turn, was said to be due to Beverly's failure adequately to monitor Evans.

Beverly holds degrees in pharmacy and in medicine. Upon completion of his medical residency in 1961, he joined the staff of a hospital in Newark, New Jersey where he continuously practiced anesthesiology until October 4, 1975. On that date he accidently fell in the operating room and struck the back of his head. He was hospitalized for one month. Complications of the injury included convulsion and a left paralysis. Following a prolonged period of recuperation and rehabilitative therapy, Beverly worked for two and one-half years on a research project. Thereafter, he came to Baltimore to study for a master's degree at the School of Public Health at Johns Hopkins University. Beverly began drinking heavily, but, recognizing his problem, he voluntarily admitted himself to a full-time treatment program that he successfully completed. He returned to his studies and obtained his master's degree in 1982. In October of that year, he applied for privileges in anesthesiology at Lutheran. Courtesy provisional privileges at that hospital were granted in May 1983. Lutheran, in granting privileges, was aware of Beverly's prior head injury and the hiatus in his practice of medicine.

Beverly had also been accorded privileges at The Wyman Park Medical Center (Wyman Park). A patient to whom Beverly had administered anesthesia at Wyman Park on January 18, 1983, died on February 11, 1983, after having been in a coma for twenty-five days. A malpractice claim was asserted against Beverly on behalf of the patient's family through the same attorney who represents Evans. This wrongful death claim has been referred to in the instant matter as the Tinkler claim. The Tinkler plaintiffs alleged that Beverly had inserted the endotracheal tube into the patient's esophagus, causing brain damage and ultimately death. At some point during the pendency of Tinkler, Beverly acknowledged to his counsel and insurer that he had made the mistake, as alleged. The claim was settled, without a court trial, at or within policy limits.

Beginning in 1984 and continuing through April 23, 1986, Beverly spent the cold weather months in Barbados where he worked as an anesthesiologist at Queen Elizabeth Hospital in Bridgetown.

Counsel for Evans was aware of Beverly's 1975 head injury and of the eight-year hiatus in his practicing anesthesiology. On behalf of Evans and of the Tinkler clients, counsel sought an injunction against Beverly's practice of medicine in Maryland. The matter ultimately was presented to the Commission on Medical Discipline (the Commission) which, in May 1986, suspended Beverly, pending a determination of his competency. These proceedings were prominently reported in the local press.

Roy L. Mason, Esq. (Mason), whom Med Mutual had engaged to represent Beverly in the Evans malpractice action, was engaged by Med Mutual to represent Beverly in seeking reinstatement of his medical license. Med Mutual caused Beverly to be examined in August 1986 in the Department of Neurology at the Yale University School of Medicine. This examination revealed no evidence of brain impairment or cognitive disorder. The Commission also caused Beverly to be examined by Dr. Jonas Rappaport, who found Beverly physically and mentally capable of practicing.

The hearing of the Evans claim before a panel in Health Claims Arbitration began in July 1986. Proceedings were conducted at intervals, and the hearing was not concluded until November 1986. Going into the hearing, Evans's demand was $500,000 and the counter-offer was $200,000. Medical experts for the defense apparently testified that there was no evidence of a hypoxic event, that focal brain damage could not be attributed to hypoxia, and that there were other explanations, e.g., prescribed medications, for some of Evans's symptoms. The panel awarded Evans $500,000.

Evans rejected the award 3 and filed a complaint in the Circuit Court for Baltimore City seeking a jury trial of the malpractice claim. Evans set her demand at $1 million. Beverly, on the other hand, moved to set aside the arbitrators' award. 4 He was successful. 5 The effect of vacating the award was that the trial of the malpractice case proceeded as if there had been no award. Md.Code (1974, 1989 Repl.Vol.), § 3-2A-06(c) of the Courts and Judicial Proceedings Article (CJ). Thus, the jury in the malpractice action was not instructed to presume that the award was correct. CJ § 3-2A-06(d).

During pendency of the malpractice action in circuit court, Beverly admitted to his counsel, Mason, and to Med Mutual that he had a disability income policy with The Paul Revere Life Insurance Company (Paul Revere) on which he had been collecting benefits at the rate of approximately $36,000 per year and that he had continued to collect those disability benefits following his resumption of the practice of anesthesiology at Lutheran and at Wyman Park.

This revelation caused Med Mutual to consult the late David M. Buffington, Esq. (Buffington), who advised in July 1987 as follows:

1. Until Beverly corrected the fraud on Paul Revere, Mason's efforts to have Beverly's medical license reinstated must be discontinued and Med Mutual could terminate the payment of fees for those services.

2. Med Mutual could not disclaim coverage, because the fraud affected Paul Revere, not Med Mutual.

3. Mason was not obliged to discontinue representing Beverly in the malpractice action, unless Beverly should commit perjury in connection with further proceedings in that case.

4. Beverly's assets in Barbados would be subject to seizure to satisfy any excess judgment, if suit based on an American judgment were filed there, resulting in a judgment under the law of Barbados. 6

Mason, independently, also obtained a legal ethics opinion from Professor William Weston of the University of Baltimore School of Law....

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