How Many Occurrences Have Occurred Where the Occurrence Occurs Under Statutory MCARE Coverage?

By Michelle L. Wilson, Esq.*

The Pennsylvania Supreme Court recently addressed the meaning of “occurrence” with regard to the limits of coverage provided by the Medical Care Availability and Reduction of Error Fund (Fund) on matters that fall under the “extended claim” provision at § 715 of the MCARE Act, i.e. matters brought more than four years after the alleged negligence. In Kinney-Lindstrom v. MCARE Fund, 2013 Pa. LEXIS 1786 (2013), the plaintiff sought declaratory judgment against the Fund, seeking, in part, a determination of the coverage limits applicable to an underlying verdict in favor of both of her twin children for the negligence of the doctor who had treated her during pregnancy. The doctor had assigned to the plaintiff his rights to litigate this issue.

The underlying matter involved allegations of a failure to timely diagnose in utero infections suffered by the twins that caused permanent damages. Each child had been awarded an amount in excess of the $1 million limit set forth in § 715(b) of the MCARE Act: “The limit of liability of the fund for a claim defended by the department under subsection (a) shall be $1,000,000 per occurrence.” The plaintiff sought to recover $1 million per child, while the Fund sought a determination that only one occurrence was at issue, thereby limiting recovery to only one such amount. The Pennsylvania Commonwealth Court had denied summary judgment to the plaintiff and granted summary judgment to the Fund on this issue. It relied upon the holding of the Pennsylvania Supreme Court in Donegal Mutual Insurance Company v. Baumhammers, 938 A.2d 286 (Pa. 2007), to find that the underlying liability arose from a single “occurrence,” insofar as one should look to the “cause” of an injury as the occurrence, and not to the number of victims or “effects” from such cause.

On appeal to the Supreme Court, the plaintiff argued that the Donegal holding should not apply to the definition of “occurrence” in the Act because Donegal involved the interpretation of specific language in a private contract of insurance. She further argued that, when considering the application of statutory coverage under the Act, the court should apply the “remedial” goal of the Act, referring to § 102(4), declaring one purpose of the Act to be “a prompt determination and fair compensation” for any person injured by medical negligence. For these two reasons, she sought a declaration that an occurrence should be viewed on a “per victim” basis, rather than a “per cause” basis. Finally, she asserted that, even when viewing this matter on a “per cause” basis, the Fund was liable for an additional limit because each of her children was damaged by a distinct organism at a distinct time—thus, constituting two separate causes.

The court agreed that Donegal was not dispositive insofar as it interpreted the term “occurrence” within a private contract of insurance. However, it noted that the Act’s use of the term was not defined and, therefore, was ambiguous. It then noted that the legislature had used both the terms “claim” and “occurrence” separately in § 715(b) and, so, could not have meant that each “claim” (or “injury” or “victim”) should be considered a separate occurrence under the Act. It noted that the legislature could have used such terms, rather than the term “occurrence,” if it had intended to apply the “effects” approach to claims covered by the Fund.

The Supreme Court further rejected the plaintiff’s interpretation of the Act’s policy statement, noting that other issues had been recognized by courts as primary purposes for the Act: the perceived increasing costs of malpractice claims, the rise in insurance premiums for providers and the fear that providers would leave Pennsylvania for those reasons. See, Pennsylvania Medical Society v. Department of Public Welfare, 39 A.3d 267 (Pa. 2012). Thus, the court held that the number of occurrences for which the Fund is liable under § 715 is determined by examining whether one or more instances of professional negligence caused the harm alleged; the number of victims is not controlling.

Despite such holding, the court still remanded the case to the Commonwealth Court. It found that a genuine issue of material fact remained regarding whether there had been more than one instance of professional negligence by the involved doctor. The plaintiff had alleged that the underlying matter involved two separate occurrences, even if assessing by cause, in that there were distinct failures to treat a different infection as to each child. This factual issue had not been raised in the earlier trial on negligence.

Because the court left open the possibility that distinct allegations of negligence may constitute separate occurrences, is it possible that plaintiffs will seek additional limits against statutory and private insurers by alleging separate and distinct, or serial, allegations of negligence as to the care of each patient? Similarly, could a plaintiff contend that a claim of informed consent, alleged in conjunction with a claim of negligence in operative or post-operative care, constitute separate occurrences? It appears that the Pennsylvania Supreme Court specifically addressed such questions/concerns in the sentence which follows its holding: “Additionally, each instance of negligence must be associated with a distinct injury.” Furthermore, the court noted on several occasions that, ultimately, in matters involving private insurance, the definition of “occurrence” within the policy will control.

*Michelle is a shareholder in our Bethlehem, Pennsylvania, office. She can be reached at 484.895.2326 or mlwilson@mdwcg.com.

Defense Digest, Vol. 19, No. 4, December 2013

Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2013 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.