Verdicts

PA's Excess Liability Fund Must Pay

Pennsylvania's Supreme Court has ruled that the state's excess medical malpractice liability fund must cover the shortfall where the primary insurer for two doctors found jointly and severally liable became insolvent, the insurer taking over its obligations was required to pay only half of the damages assessed against one of the doctors, and the liabilities arose under a previous PA excess liability scheme that would have required such payment. Heim v. Medical Care Availability and Reduction of Error (MCARE) Fund, No. 5 MAP 2010, Supreme Court of Pennsylvania, 2011 Pa. LEXIS 946, Dec. 1, 2010, Argued, April 28, 2011, Decided.

Plaintiff Stephen B. Heim sued Dr. Robert O. Detweiler, his practice group, and Dr. Stephen J. Carver, an employee of the practice group. Heim alleged that the defendants' treatment of his deceased wife was substandard. He was awarded $707,000 after the defendants were found jointly and severally liable.

Both doctors were insured by a now defunct insurer in the amount of $200,000 per occurrence. This amount was the statutorily required minimum under Pennsylvania law. When the doctors' insurer became insolvent, the Pennsylvania Property and Casualty Association (PPCIGA) took over the claims. All such claims assumed by PPCIGA were subject to a limitation of $300,000 per claim. PPCIGA allocated $200,000 of that amount to Dr. Detweiler and $100,000 to Dr. Carver, and paid out the $300,000 to Heim. All parties agreed that PPCIGA had satisfied its responsibility to its insureds and to Heim. Heim then sought to recover the excess from Dr. Detweiler's practice group. The practice group settled for $125,000, as well as an assignment to Heim of a declaratory action it had brought against MCARE, Pennsylvania's excess medical malpractice insurer, that it was required to pay the $100,000 shortfall attributable to Dr. Carver. At trial, Heim prevailed against the MCARE Fund. This appeal ensued.

Writing for the unanimous court, Justice Thomas G. Saylor first noted that the outcome of the case would turn on “the interplay among the statutory schemes providing health care providers with protection from excess liability and insurer insolvency and the doctrine of joint and several liability.” At the time the doctors' liability accrued, Pennsylvania had in place another excess liability scheme, known colloquially as “the CAT” (Medical Professional Liability Catastrophe Loss Fund (40 P.S. ' 1303.701(d)). It provided that the CAT Fund was responsible to pay the judgment against each of Drs. Detweiler and Carver to the extent the judgment “exceeds its [or his] basic coverage insurance in effect at the time of the occurrence[.]“. The MCARE Act ' 1303.712(a), however, did not explicitly indicate that the primary insurance coverage establishing the excess coverage baseline was that of the provider-in-issue, instead establishing MCARE liability for losses or damages awarded “in excess of the basic insurance coverage.” The MCARE Fund therefore claimed that, as a straightforward matter of statutory construction, the Fund was not authorized to compensate for shortfalls arising due to the insolvency of a primary insurer. The Fund reasoned that, by definition, it and its predecessor provide[d] protection against liability in “excess” of “basic coverage insurance” (under the statutory framework delineating CAT Fund obligations, 40 P.S. 40 P.S. ' 1303.701(d) (superseded)), or “basic insurance coverage” (under the MCARE Act, 40 P.S. ' 1303.701(d)).

The appellate court found, however, that the underlying liabilities were incurred, and a judgment was issued, under the regime of the CAT Fund, and those liabilities were later merely assumed by the MCARE Fund. Therefore, CAT Fund provisions should apply, and the CAT Fund statute's establishment of a provider's own primary coverage as the boundary between what is primary and what is excess relative to that provider ruled. “In summary,” the court concluded, “under the statutory scheme governing CAT Fund liabilities, the CAT Fund's excess coverage responsibility to a health care provider was measured from the baseline of such provider's own primary coverage. In the present case, the floor was Dr. Detweiler's $200,000 'basic coverage insurance' (as it was denominated by the HCSMA, 40 P.S. ' 1301.701(d) (superseded)). Therefore, such liability as Dr. Detweiler bore for the shortfall in Dr. Carver's primary coverage, as well as associated delay damages and pre-judgment interest, fell within the CAT Fund's excess coverage obligation relative to Dr. Detweiler ' . The responsibility for this now falls to the MCARE Fund ' with the benefits inuring to Dr. Detweiler, and, derivatively, to Mr. Heim.”

PA's Excess Liability Fund Must Pay

Pennsylvania's Supreme Court has ruled that the state's excess medical malpractice liability fund must cover the shortfall where the primary insurer for two doctors found jointly and severally liable became insolvent, the insurer taking over its obligations was required to pay only half of the damages assessed against one of the doctors, and the liabilities arose under a previous PA excess liability scheme that would have required such payment. Heim v. Medical Care Availability and Reduction of Error (MCARE) Fund, No. 5 MAP 2010, Supreme Court of Pennsylvania, 2011 Pa. LEXIS 946, Dec. 1, 2010, Argued, April 28, 2011, Decided.

Plaintiff Stephen B. Heim sued Dr. Robert O. Detweiler, his practice group, and Dr. Stephen J. Carver, an employee of the practice group. Heim alleged that the defendants' treatment of his deceased wife was substandard. He was awarded $707,000 after the defendants were found jointly and severally liable.

Both doctors were insured by a now defunct insurer in the amount of $200,000 per occurrence. This amount was the statutorily required minimum under Pennsylvania law. When the doctors' insurer became insolvent, the Pennsylvania Property and Casualty Association (PPCIGA) took over the claims. All such claims assumed by PPCIGA were subject to a limitation of $300,000 per claim. PPCIGA allocated $200,000 of that amount to Dr. Detweiler and $100,000 to Dr. Carver, and paid out the $300,000 to Heim. All parties agreed that PPCIGA had satisfied its responsibility to its insureds and to Heim. Heim then sought to recover the excess from Dr. Detweiler's practice group. The practice group settled for $125,000, as well as an assignment to Heim of a declaratory action it had brought against MCARE, Pennsylvania's excess medical malpractice insurer, that it was required to pay the $100,000 shortfall attributable to Dr. Carver. At trial, Heim prevailed against the MCARE Fund. This appeal ensued.

Writing for the unanimous court, Justice Thomas G. Saylor first noted that the outcome of the case would turn on “the interplay among the statutory schemes providing health care providers with protection from excess liability and insurer insolvency and the doctrine of joint and several liability.” At the time the doctors' liability accrued, Pennsylvania had in place another excess liability scheme, known colloquially as “the CAT” (Medical Professional Liability Catastrophe Loss Fund (40 P.S. ' 1303.701(d)). It provided that the CAT Fund was responsible to pay the judgment against each of Drs. Detweiler and Carver to the extent the judgment “exceeds its [or his] basic coverage insurance in effect at the time of the occurrence[.]“. The MCARE Act ' 1303.712(a), however, did not explicitly indicate that the primary insurance coverage establishing the excess coverage baseline was that of the provider-in-issue, instead establishing MCARE liability for losses or damages awarded “in excess of the basic insurance coverage.” The MCARE Fund therefore claimed that, as a straightforward matter of statutory construction, the Fund was not authorized to compensate for shortfalls arising due to the insolvency of a primary insurer. The Fund reasoned that, by definition, it and its predecessor provide[d] protection against liability in “excess” of “basic coverage insurance” (under the statutory framework delineating CAT Fund obligations, 40 P.S. 40 P.S. ' 1303.701(d) (superseded)), or “basic insurance coverage” (under the MCARE Act, 40 P.S. ' 1303.701(d)).

The appellate court found, however, that the underlying liabilities were incurred, and a judgment was issued, under the regime of the CAT Fund, and those liabilities were later merely assumed by the MCARE Fund. Therefore, CAT Fund provisions should apply, and the CAT Fund statute's establishment of a provider's own primary coverage as the boundary between what is primary and what is excess relative to that provider ruled. “In summary,” the court concluded, “under the statutory scheme governing CAT Fund liabilities, the CAT Fund's excess coverage responsibility to a health care provider was measured from the baseline of such provider's own primary coverage. In the present case, the floor was Dr. Detweiler's $200,000 'basic coverage insurance' (as it was denominated by the HCSMA, 40 P.S. ' 1301.701(d) (superseded)). Therefore, such liability as Dr. Detweiler bore for the shortfall in Dr. Carver's primary coverage, as well as associated delay damages and pre-judgment interest, fell within the CAT Fund's excess coverage obligation relative to Dr. Detweiler ' . The responsibility for this now falls to the MCARE Fund ' with the benefits inuring to Dr. Detweiler, and, derivatively, to Mr. Heim.”