2016 Ohio 8367
Ohio Ct. App.2016Background
- Wright State Physicians (WSP) is a medical-practice group; Dr. Daniel Lacey (WSP physician) treated a child at Children’s Medical Center (CMC).
- The Doctors Company (TDC) issued separate malpractice policies to CMC and to WSP; WSP’s policy was a claims-made policy effective 4/15/2009–4/15/2010 and required written notice to TDC during the policy period.
- On 12/28/2009 an attorney sent letters asserting malpractice as to the child’s care; CMC forwarded information to TDC in Feb. 2010 and TDC’s claim file recorded that Dr. Lacey (a WSP/TDC insured) was a potential codefendant.
- WSP did not provide TDC its own written Claim Report during the policy period; suit was filed in Sept. 2011 against CMC, WSP, and Lacey; TDC defended CMC but denied WSP/Lacey because WSP had not complied with the policy’s written-notice requirements.
- WSP and Lacey sued TDC for breach of contract and bad faith; trial court granted summary judgment to TDC; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TDC breached the claims-made policy by refusing coverage where TDC had actual notice of the claim via CMC and its communications | Actual notice to TDC (through CMC) during the policy period satisfies the policy’s notice requirement | Policy requires written Claim Report from the Protected Party (or its agent) received at TDC during the policy period; actual notice alone is insufficient | Held for defendant: actual notice from CMC did not satisfy WSP’s written-notice condition precedent, so no breach |
| Whether TDC acted in bad faith by denying coverage despite actual notice in its file | Denial was unreasonable given TDC’s actual knowledge of allegations against WSP/Lacey | Denial was justified by WSP’s failure to comply with the policy’s explicit notice conditions | Held for defendant: no bad-faith where insurer reasonably relied on clear policy notice requirements |
Key Cases Cited
- Cincinnati Cos. v. West Am. Ins. Co., 183 Ill.2d 317, 701 N.E.2d 499 (Illinois 1998) (addressed whether insurer’s duty to defend arises on insurer’s actual receipt of suit or on insured’s tender; distinguished here because policy language differs)
- Goodyear Tire & Rubber Co. v. Aetna Casualty & Surety Co., 95 Ohio St.3d 512, 769 N.E.2d 835 (2002) (notice provisions in insurance contracts are conditions precedent to coverage)
- Elkins v. Am. Int’l Spec. Lines Ins. Co., 611 F. Supp. 2d 752 (S.D. Ohio 2009) (claims-made policies require claim/report during policy period; notice is a condition precedent)
- Mueller v. Taylor Rental Ctr., 106 Ohio App.3d 806 (Ohio Ct. App.) (the essence of a claims-made policy is that the claim be first made during the policy period)
- Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552, 644 N.E.2d 397 (1994) (bad-faith tort requires insurer to lack reasonable justification for denial)
- United States v. A.C. Strip, 868 F.2d 181 (6th Cir.) (distinguishing claims-made and occurrence policies; claims-made limits liability to reporting period)
- Twin Maples Veterinary Hosp. v. Cincinnati Ins. Co., 159 Ohio App.3d 590, 824 N.E.2d 1027 (2005) (courts enforce clear, unambiguous policy language; cannot rewrite contract)