Number Of Occurrences:  West Virginia Supreme Court Finds Separate Limits Applicable In Medical Malpractice Case.

The West Virginia Supreme Court, applying West Virginia law, ruled that separate limits of $3,000,000 are available for medical malpractice claims in addition to a global settlement of the same amount, and that reformation of the policy was not warranted.

The underlying medical malpractice claims relate to surgeries performed by an employee of United Health Professionals Inc. (“UHP”). Based upon a global settlement agreement between UHP and the injured parties, the insurer had paid $3 million under an extended reporting endorsement that insured the surgeon. The injured parties sought a declaration that there was additional insurance coverage available to them under the global settlement. The parties stipulated that the policy provisions at issue are clear and unambiguous; therefore, the circuit court concluded the policy terms were not subject to judicial construction. The circuit court found that UHP owed the injured parties an additional $6 million based upon the policy limits of the 2006 and 2007 policies (the years in which the incidents occurred).

The appellate court disagreed with the circuit court that the words “policy period” referred to the 2006 and 2007 claims-made policies, which had expired by their own terms and found instead that the “policy period” is expressly defined in the 2010 policy as the period of 01-01-2010 to 01-01-2011, which encompassed the year the claims were first reported.  The appellate court found nothing in the policy that would support the circuit court’s conclusion that “policy period” referred to anything other than the 2010 policy period.

However, the court found that under the 2010 policy, UHP had additional limits, separate from those for the surgeon, of $3 million for medical incidents occurring after the retroactive date of January 1, 2002. The insurer had argued that, notwithstanding the 2010 policy’s plain and unambiguous terms, UHP only intended to have separate policy limits for medical incidents occurring after January 1, 2008, and shared limits for medical incidents occurring before January 1, 2008, but after January 1, 2002 and requested reformation. The court held that reformation was not warranted because the policy language was clear and sophisticated parties were involved in drafting the policy.  West Virginia Mut. Ins. Co. v. Adkins, No. 13-0692 (W. Va. Oct. 15, 2014).