National Union Fire Ins. v. Miss Ins. Guar.

Decision Date04 September 2008
Docket NumberNo. 2007-FC-01981-SCT.,2007-FC-01981-SCT.
Citation990 So.2d 174
CourtMississippi Supreme Court

Todd Britton Murrah, attorney for appellant.

Clifford C. Whitney, III, R.E. Parker, Jr., Vicksburg, attorneys for appellee.


DICKINSON, Justice, for the Court.1

¶ 1. The United States Court of Appeals for the Fifth Circuit has certified2 to us the following question:

Miss. R.App. P. (20)(a).

Whether a solvent-carrier's insurance policy,3 which provides an "other-insurance" clause stating it is in excess to any other primary insurance, must be exhausted under Mississippi Code Annotated § 83-23-123, ahead of MIGA's statutory coverage of the insolvent-carrier's primary policy.

National Union Fire Ins. Co. v. Miss. Ins. Guar. Ass'n., 507 F.3d 309, 312 (5th Cir. 2007).


¶ 2. A patient sued her doctors, who were both covered under two insurance policies, one issued by Pennsylvania Hospital Indemnity Company ("PHICO"), and the other by National Union Fire Insurance Company ("NUFIC"). Between the two policies, there is no dispute that PHICO's policy was primary.

¶ 3. After assuming the legal defense of both doctors and then settling with one, PHICO was declared insolvent. The Mississippi Insurance Guaranty Association ("MIGA") immediately assumed the defense of the remaining doctor and then proceeded to evaluate its liability for the claim, concluding it had no duty to pay prior to exhaustion of coverage under the NUFIC policy.

¶ 4. NUFIC disagreed and filed a declaratory judgment action in the United States District Court for Southern District of Mississippi. MIGA responded with a counterclaim for declaratory judgment. Both parties filed motions for summary judgment. The district court granted summary judgment to MIGA. NUFIC appealed, which led to the certified question recited above, which we will now address.


¶ 5. The NUFIC policy includes the following "other-insurance" provision:

A loss covered under this policy may also be covered under another policy you have. If it is, our policy will apply only in excess of such other coverage no matter how such other coverage is described. This clause will not apply to coverage which is expressly stated to apply in excess of this specific policy.

NUFIC claims that—because MIGA stands in the shoes of PHICO—this provision relieves it of any duty to pay the claim until benefits under the PHICO policy are paid by MIGA. As further authority for its position, NUFIC cites the following statutory language:

[MIGA shall] [b]e deemed the insurer to the extent of its obligations on the covered claims and to such extent shall have all the rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent.

Miss.Code Ann. § 83-23-115(1)(b) (Rev. 1999). This provision, NUFIC argues, means that MIGA must pay the claim exactly as PHICO would have been required to do, had it not become insolvent. We disagree.

¶ 6. MIGA is not an insurance company, but rather a guaranty association created by the Legislature to provide protection to claimants and policyholders of insolvent insurance companies. Miss.Code Ann. § 83-23-103 (Rev.1999). MIGA's duties and responsibilities are strictly controlled by statute. Upon reviewing all of the provisions of the Mississippi Insurance Guaranty Association Law, Mississippi Code Annotated Section 83-23-101 to-235, we conclude that MIGA's obligation to stand in the shoes of PHICO under Section 83-23-115(1)(b) is subject to the limitations and qualifications found within the other statutes in the Mississippi Insurance Guaranty Association Law,5 in which is found Section 83-23-123(1), which states quite clearly:

Any person having a claim against an insurer under any provision in an insurance policy other than a policy of an insolvent insurer, which is also a covered claim, shall be required to exhaust first his right under such policy.

Miss.Code Ann. § 83-23-123(1) (Rev.1999). This provision, in effect, eliminates from MIGA's statutory guaranty any obligation to pay a claim prior to the exhaustion of all other-insurance, other than coverage under true excess policies.6

¶ 7. In support of its argument, NUFIC argued to the Fifth Circuit that our prior decision in Caldwell means it is not required to "drop down" and provide primary coverage in the place of PHICO, an insolvent primary insurer. The distinction between Caldwell's true excess insurance policy and the NUFIC policy (which is a primary policy with an "other insurance" provision) was not lost on the Fifth Circuit, which stated that

the excess provision in the Caldwell policy is worded differently than in NUFIC's. Indeed, MIGA asserts the provisions in Caldwell is "true excess" insurance while NUFIC's policy contains only an "other insurance" clause.

National Union Fire Ins. Co., 507 F.3d at 311.

¶ 8. The rationale in Caldwell was clear. A true excess carrier did not contract to provide primary coverage, and cannot be made to do so simply because the primary carrier becomes insolvent. The same cannot be said of NUFIC, which contracted for primary coverage. The NUFIC policy's "other-insurance" clause did not transform it into a true excess policy when PHICO became insolvent.


¶ 9. In response to the question certified to us by the Fifth Circuit, we hold that a solvent carrier's insurance policy which is not a true excess policy, and which provides an "other-insurance" clause stating it is in excess to any other primary insurance, must nevertheless be exhausted prior to MIGA's statutory duty to provide coverage under an insolvent-carrier's primary policy.



DIAZ, Presiding Justice, concurring.

¶ 11. I write separately to furnish this case's original opinion, drafted by me which reaches the same conclusion as today's opinion.

¶ 12. In this case the Court is called upon to answer a question of law certified to it by the Fifth Circuit Court of Appeals. The Court must decide whether Mississippi Code Section 83-23-123(1) requires that the coverage provided by a solvent insurance carrier's liability policy, which contains an "other-insurance" clause, be exhausted before the Mississippi Insurance Guaranty Association becomes obligated to provide coverage under an insolvent insurance carrier's primary policy.


¶ 13. On March 23, 1999, Patricia Wright (Patricia) went to the Senatobia Community Hospital (Senatobia Hospital) emergency room complaining of shortness of breath as well as leg and chest pain. Patricia was examined by an emergency room physician and released shortly thereafter without having received any treatment. When she began experiencing the same symptoms the following day, she returned to the Senatobia Hospital emergency room. Again, she was examined by an emergency room physician and then sent home without treatment. On March 26, 1999, Patricia's symptoms became more pronounced. Patricia's mother called an ambulance, which transported her to the Northwest Mississippi Regional Medical Center (NMRMC). By the time she arrived at the medical center, she was in full cardiac arrest. She died shortly after arrival.

¶ 14. Kathleen Wright (Kathleen), Patricia's sister, filed a wrongful-death action in the Circuit Court of Coahoma County on behalf of herself and all other wrongful death beneficiaries against Senatobia Hospital; the two emergency room physicians who examined Patricia at the Senatobia Hospital, Dr. Cary Mettetal and Dr. Edwin Orr; and Emergystat, Inc. (Emergystat), the company that operated the ambulance which transported Patricia to NMRMC. Kathleen's complaint alleged that Dr. Mettetal and Dr. Orr negligently failed to diagnose and treat Patricia's pulmonary embolus—the apparent underlying cause of her death.

¶ 15. Dr. Mettetal and Dr. Orr were insured under two liability policies issued by separate insurance companies. They were insured under a liability policy issued by the PHICO Insurance Company (PHICO) to three companies involved in the operation of the Senatobia Hospital emergency room—EMCARE Holdings, Inc., Spectrum Emergency Care, Inc. and STAT Healthcare, Inc.7 They were also insured under a liability policy issued by the National Union Fire Insurance Company (NUFIC) to Paracelsus Healthcare Corporation (Paracelsus), the parent company of the Senatobia Hospital, which provides coverage for the emergency room physicians at the Senatobia Hospital.

¶ 16. The PHICO policy limits liability to one million dollars ($1,000,000) per incident and three million dollars ($3,000,000) in the aggregate. It provides that "PHICO shall have the duty to defend any claim against the insured for damages payable under this policy even if the allegations of the claim are groundless, false or fraudulent." The policy also contains under the heading "General Conditions" the following clause:

3. Other Insurance. Any insurance afforded by this policy for medical professional liability arising from a medical incident is primary insurance. As primary insurance, PHICO's obligations are not affected unless any other insurance is primary, in which case PHICO will share with such other insurance by method (a) or (b) below, as applicable.

The NUFIC policy also limits liability to one million dollars per "wrongful act" and three million dollars in the aggregate. The NUFIC policy's other-insurance clause reads as follows:

E. Other Insurance

A loss covered under this policy may also be covered under another policy you have. If it is, our policy will apply only in excess of such other coverage no matter how such...

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