Making New Law Against Entities that Deny Insurance Coverage
Unfortunately a jury verdict in favor of a plaintiff doesn’t always mean they will automatically be compensated for their losses. This was the situation the Thistle Law Firm faced following a $7 million medical malpractice verdict in favor of its clients. While the attorneys at The Thistle Law Firm were able to obtain insurance coverage for this verdict from the primary, or first level, insurance carrier, the Medical Care Availability and Reduction Fund (“MCARE”) refused to provide any excess coverage after the primary coverage limits were exhausted. Worse yet, when the attorneys at the Thistle Law Firm filed a claim with the Commonwealth Court of Pennsylvania seeking coverage, MCARE attempted to block the clients’ access to the courts. The MCARE Fund filed preliminary objections to The Thistle Firm’s complaint, arguing that the Insurance Department, and not the Commonwealth Court of Pennsylvania, had original jurisdiction over coverage disputes with the MCARE Fund. This would mean that the Thistle Firm would have to refile its claim with the Insurance Department.
Why was MCARE claiming this? Up until March 20, 2002 the MCARE Fund was formally known as the Medical Professional Liability Catastrophe and Loss Fund (“CAT Fund”), and was governed by section 701(e) of the Health Care Services Malpractice Act (the “Malpractice Act”). In Ohio Casualty Group of Ins. Cos. v. Argonaut Ins. Co., 514 Pa. 430 the Pennsylvania Supreme Court held that the Malpractice Act did not grant authority to the Insurance Department to hear coverage disputes, and that the Pennsylvania courts had jurisdiction over such disputes. On March 20, 2002, Act 13 of 2002 (the MCARE Act) was passed into law and made the MCARE Fund the successor to the CAT Fund. There were some changes made to the MCARE Act from the Malpractice Act which governed the CAT Fund – such as giving the Insurance Department the Right to administer the MCARE Fund and hear disputes over assessments. Based on these changes the MCARE Fund now took the position that all coverage disputes had to be filed with the Insurance Department, and parties seeking coverage from the MCARE Fund typically did just that.
However the Thistle Firm challenged this position. We argued that the changes to the MCARE Act were minor and, despite the Pennsylvania legislatures’ knowledge of the Supreme Court’s holding in Ohio Casualty, it still did not create a section granting authority to the Insurance Department to hear coverage disputes. Therefore, we argued, given the legislatures’ knowledge of the holding in Ohio Casualty, if the legislature intended to have the Insurance Department hear coverage disputes, it would have created a section granting the Department that authority. Instead the legislature only established a section giving the Insurance Department authority to hear disputes over insurance assessments, but not coverage disputes.
Another issue raised by the attorneys at the Thistle Law Firm was the fact that, in any case involving coverage disputes with both a primary insurance carrier and the MCARE Fund, the Insurance Department could not provide an adequate remedy. This was because the Insurance Department had no authority to hear disputes involving private primary insurance carriers. Therefore, in any coverage dispute in which a primary carrier was also involved, there would be two separate hearings – one in the Pennsylvania courts and one with the Insurance Department – that could result in inconsistent rulings.
Because of the importance of the question involved, the case was taken to the Pennsylvania Supreme Court which ultimately ruled in favor of the Thistle Law Firm and its clients in Fletcher v. Pa. Prop. & Cas. Ins. Guar. Ass’n, 985 A.2d 678. The Thistle Law Firm also successfully challenged the MCARE Fund’s denial of coverage in the Commonwealth Court in Fletcher v. Pa. Prop. & Cas. Ins. Guar. Ass’n, 27 A.3d 299. The Fund ultimately settled its coverage dispute with the Thistle Firm and its clients.
Not only are the attorneys at the Thistle Law Firm experienced at litigating cases on behalf of its clients, but they have the knowledge and skill to challenge the denial of coverage for verdicts in its clients’ favor to ensure that they are fully compensated for their losses.