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like a nurse or therapist. Therefore, in our case, once both
the hospital and the nurse were named in the suit, the coverage
was increased by $500,000. Also of significance, the nurse had
a separate $1,000,000 policy of her own. By suing the nurse individually,
along with the hospital, the coverage was increased from $500,000
to $2,000,000.
Claims-Made Policies
Coverage may vary depending on which policy year of insurance
applies to the "claim." Claims-made professional liability insurance
provides coverage in the policy year when the physician reports
a claim to his or her company. Frequently in malpractice cases
several different policy periods can apply: for example, when
the injury happened; when records were requested; or when the
suit was filed. After a poor health care outcome a physician may
contact his insurance company, triggering a claims-made policy.
Similarly, when an attorney requests medical records the physician
may notify his carrier, again triggering coverage.
In a malpractice case settled in
October of 1998, involving a
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now retired Kansas obstetrician, the initial discovery response
from the defendant stated that the physician's coverage was $800,000.
This was the amount provided by the Kansas Health Care Stabilization
Fund for the coverage level the retired physician selected. Additional
discovery, including a subpoena to the underlying primary insurance
company, revealed that the claims-made policy had been triggered
before the physician retired, when he had $1,000,000 coverage,
therefore providing an additional $200,000 in coverage.
Our position was that the claims-made policy was triggered when
the physician called his insurance company to report the claim
after an attorney requested the medical records. At that time
the insurance company hired an attorney who requested a full investigation,
including collecting plaintiff's medical records, talking to witnesses,
and hiring experts. KaMMCO, the insurance company involved, denied
that a claim had been made and initially refused to provide coverage.
Shortly before plaintiff's $1,000,000 demand expired, KaMMCO paid
the additional $200,000,
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while still holding to its position that the $200,000 did not
represent additional insurance coverage.
Defense Attorneys
A complicating feature to discovery of a malpractice defendant's
insurance limits is the position taken by defense attorneys that
it is not their obligation to investigate the amount of their
client's coverage. In the above examples, the defense attorneys
simply passed along whatever information the insurance company
provided as to the coverage in discovery responses. It appears
the attorneys do not obtain the policies or investigate the coverage
for themselves. Even when a potential discrepancy in the coverage
is called to their attention, the attorneys are caught in a dilemma
between clients with divergent interest. On one hand the insurance
company would like the coverage to be lower, and on the other
hand a defendant facing a potentially large judgment would like
the coverage to be higher. Given this position, it is incumbent
upon the plaintiff's attorney to conduct the necessary discovery
until applicable coverage is verified.
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