133 So. 3d 707
La. Ct. App.2014Background
- A certified class of medical providers sued Executive Risk and Homeland under Louisiana’s direct action statute, arising from CorVel’s alleged failure to comply with La. R.S. 40:2203.1 (billing/notification requirements for PPOs).
- Executive Risk insured CorVel on claims-made E&O policies from Oct. 31, 1999 to Oct. 31, 2005; Homeland issued subsequent policies.
- The plaintiff class obtained a partial summary judgment holding Executive Risk’s policies provide coverage for the class’ statutory damages and attorney fees under La. R.S. 40:2203.1(G).
- Executive Risk appealed, arguing (1) premature summary judgment due to outstanding discovery, (2) insufficient evidence that a "Claim" arose during its policy period, (3) the statutory damages are punitive/penalties and excluded, (4) CorVel failed to timely notify or obtain consent before settling, and (5) Delaware judgment/full faith and credit issues.
- The record included a May 17, 2005 letter from Louisiana’s Office of Risk Management to CorVel demanding defense/indemnity and reimbursement, which the trial court treated as a covered "Claim." Executive Risk did not object to the letter’s admissibility.
- The appellate court reviewed de novo and affirmed: it held the policy covers the asserted damages, the ORM letter constituted a covered Claim during the policy period, and defenses based on notice/consent are not available to defeat a direct action by plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether La. R.S. 40:2203.1(G) damages are covered or excluded as penalties/punitive damages | Damages are statutory and thus covered as monetary Loss under the policy | Damages are punitive/penal and fall within the policy exclusion for fines/penalties/punitive damages | Held covered: statute uses "damages" and policy does not exclude statutory damages; coverage applies |
| Whether a "Claim" arose during Executive Risk’s policy period | The ORM May 17, 2005 letter is written notice that a party intends to hold CorVel responsible, satisfying the policy's Claim definition | Letter is unauthenticated and references Title 23 claims, so insufficient to establish a Claim during the policy period | Held a Claim existed: the letter fit the policy definition; Executive Risk waived authenticity objection by failing to object |
| Whether CorVel’s alleged failure to timely notify or to obtain insurer consent for settlement defeats direct claims by plaintiffs | Plaintiffs may proceed directly against insurer under La. R.S. 22:655 despite insurer defenses against insured | Executive Risk: notice within policy and consent prerequisites not met, so no coverage | Held insurer defenses (late notice, lack of consent) are defenses against CorVel but cannot defeat a direct action by plaintiffs under the direct action statute; coverage stands |
| Whether summary judgment was premature due to outstanding discovery and reliance on untested evidence | Motion ripe; prior Delaware proceeding addressed similar issues; evidence in record sufficient | Summary judgment premature; discovery necessary; evidence ambush | Held not premature: motion ripe for adjudication given record and related Delaware proceeding; affirmed summary judgment |
Key Cases Cited
- Covington v. McNeese State Univ., 996 So.2d 667 (La. App. 3d Cir.) (de novo review of summary judgment)
- Crabtree v. State Farm Ins. Co., 682 So.2d 736 (La. 1994) (insurance-contract interpretation rules; ambiguities construed against insurer)
- Bennett v. State Farm Ins. Co., 869 So.2d 321 (La. App. 3d Cir.) (insurer bears burden to prove exclusion applies)
- Cleco Evangeline, L.L.C. v. La. Tax Comm’n, 813 So.2d 351 (La. 2002) (statutory interpretation follows plain language)
- Murray v. City of Bunkie, 686 So.2d 45 (La. App. 3d Cir.) (direct action plaintiff not subject to certain insurer defenses)
- Gorman v. City of Opelousas, 111 So.3d 1195 (La. App. 3d Cir.) (appellate discussion of direct action/insurer defenses)