330 P.3d 1209
Okla.2014Background
- PLICO issued Mark Valentine a claims-made malpractice policy (7/1/2004–12/31/2006). Valentine performed surgery on David Wurtz on 11/1/2004; Wurtz died from alleged malpractice.
- Oklahoma medical board revoked Valentine’s license on 3/10/2005; a newspaper article reported revocation and allegations of impairment.
- Valentine requested cancellation and premium refund in March 2005; the agency forwarded his letter and the article to PLICO. PLICO cancelled the policy effective 3/10/2005 and offered tail coverage/other correspondence referencing both insurer and insured initiation.
- Chandler (personal representative) filed wrongful-death suit on 6/2/2005; Valentine forwarded the suit to PLICO in July 2005. PLICO denied coverage citing cancellation before the claim and an intoxication exclusion.
- Trial court granted summary judgment for Chandler holding the cancellation violated Okla. Stat. tit. 36, § 3625 (prohibiting retroactive annulment after the injury) and thus was void; Court of Civil Appeals had reversed but Oklahoma Supreme Court granted certiorari and affirmed the trial court.
Issues
| Issue | Chandler's Argument | PLICO's Argument | Held |
|---|---|---|---|
| Whether § 3625 prohibits insurer-agreed cancellation of a claims-made policy when insurer knew of acts likely to produce a claim | Cancellation that cuts off coverage after the injury/death is void under § 3625; insurer knew of the potential claim so cancellation is void | § 3625 predates claims-made policies and should not apply to them; cancellation was insurer action (or permitted by license-revocation risk change) and thus valid | § 3625 applies to claims-made policies when insurer, with actual knowledge of the acts likely to produce a claim, agrees to cancel in a way that defeats the insured’s potential claim; the cancellation here was void and policy remained in effect |
Key Cases Cited
- State ex rel. Crawford v. Indemnity Underwriters Ins. Co., 943 P.2d 1099 (Okla. Civ. App. 1997) (explains mechanics and purpose of claims-made policies versus occurrence policies)
- TRW/Reda Pump v. Brewington, 829 P.2d 15 (Okla. 1992) (statutory interpretation starts with text to determine legislative intent)
- LaForge v. American Cas. Co., 37 F.3d 580 (10th Cir. 1994) (discusses how claims-made notice, not occurrence, triggers coverage)
- American Continental Ins. Co. v. Steen, 91 P.3d 864 (Wash. 2004) (construed an identical statute to prohibit cancelling a claims-made policy after occurrences that led to death; persuasive authority)