Summary
holding that insurance coverage was not illusory
Summary of this case from Gilmore v. Teachers Ins. Co.Opinion
No. 18975.
10-21-2014
CONNECTICUT INSURANCE GUARANTY ASSOCIATION v. Joshua DROWN et al.
Sean K. McElligott, Bridgeport, for the appellants (defendants). Kurt M. Mullen, with whom were Thomas P. O'Connor, Greenwich, and, on the brief, Mark D. Robins, pro hac vice, and Charles W. Pieterse, Greenwich, for the appellee (plaintiff).
Sean K. McElligott, Bridgeport, for the appellants (defendants).
Kurt M. Mullen, with whom were Thomas P. O'Connor, Greenwich, and, on the brief, Mark D. Robins, pro hac vice, and Charles W. Pieterse, Greenwich, for the appellee (plaintiff).
ROGERS, C.J., and PALMER, ZARELLA, EVELEIGH, McDONALD, ESPINOSA and ROBINSON, Js.
Opinion
ROBINSON, J.This certified appeal presents us with two issues of first impression in Connecticut, specifically: (1) whether an insurer's preinsolvency breach of its duty to defend a claim during an underlying litigation estops the plaintiff, the Connecticut Insurance Guaranty Association (association), from contesting its obligation under the Connecticut Insurance Guaranty Association Act, General Statutes § 38a–836 et seq. (guaranty act), to pay a claim made under the insolvent insurer's policy; and (2) whether certain vicarious liability claims are covered under a professional liability policy (policy), issued by the now insolvent Medical Inter–Insurance Exchange (Exchange), which contained a provision, designated in the policy as exclusion (i), excluding coverage for “injur[ies] arising solely out of acts or omissions in the rendering or failure to render professional services by individual physicians or nurse anesthetists, or by any paramedical for whom a premium charge is shown on the declarations page.” The defendants, Associated Women's Health Specialists, P.C. (Health Specialists), Susan Drown and Rodney Drown, individually and on behalf of their minor son, Joshua Drown, appeal, upon our grant of their petition for certification, from the judgment of the Appellate Court reversing the trial court's award of summary judgment in their favor. Connecticut Ins. Guaranty Assn. v. Drown, 134 Conn.App. 140, 37 A.3d 820 (2012). On appeal, the defendants contend that the Appellate Court improperly concluded that: (1) Exchange's preinsolvency breach of its duty to defend Health Specialists from certain claims made by the Drowns did not estop the association from challenging its liability under the policy; and (2) exclusion (i) plainly and unambiguously excluded coverage for Health Specialists' vicarious liability arising solely from the professional negligence of one of its physician employees. We disagree and, accordingly, affirm the judgment of the Appellate Court.
We refer in this opinion to Joshua Drown, Susan Drown and Rodney Drown collectively as the Drowns and individually by name.
We granted the defendants' petition for certification to appeal to this court limited to the following issues: (1) “Did the Appellate Court properly determine that exclusion (i) ... unambiguously excluded coverage in this case?”; and (2) “Did the Appellate Court properly determine that the [association] had immunity for the actions of [Exchange] committed prior to [Exchange's] insolvency?” Connecticut Ins. Guaranty Assn. v. Drown, 305 Conn. 908, 44 A.3d 183 (2012).
The record reveals the following undisputed facts and procedural history. In May, 2000, the Drowns filed a medical malpractice action against Health Specialists, a professional corporation that provides obstetrical and perinatal services, and two of its physicians, France Bourget and Richard Holden, in relation to care rendered to Susan Drown preceding, during and following her delivery of Joshua Drown. The Drowns alleged, inter alia, that Bourget and Holden negligently failed to diagnose a placental abruption, which resulted in brain damage to Joshua Drown. The Drowns alleged that Health Specialists is vicariously liable for the physicians' negligence, but did not plead claims of direct negligence against Health Specialists. At some point during the proceedings, the Drowns withdrew the counts against Holden without any settlement of those claims.During the relevant period, Health Specialists was insured through a professional liability insurance policy issued by Exchange. For a period of approximately six years following notice of the claim, Exchange agreed to provide, and did provide, a legal defense to Health Specialists, without asserting any reservation of rights under the insurance policy. In June, 2006, Health Specialists' counsel, Thomas Anderson, informed Exchange's senior claim representative that, in light of information gleaned through depositions, he had reached the conclusion that liability favored the Drowns and that settlement options should be pursued. In July, 2006, Anderson informed the senior claim representative that a mediation session had been scheduled for September 28, 2006, and that Exchange's presence was required at that session by order of the court because it had the authority to settle the action. In derogation of that order, Exchange failed to send a representative to the September mediation session, and the mediation was continued until December 7, 2006.
In October, 2006, Exchange's general counsel wrote a letter to Health Specialists for the first time to “remind [it] of some important limitations on coverage....” The letter went on to state that, “pursuant to exclusion (i), there is no coverage for [Health Specialists] for its vicarious liability for the acts of individual physicians.” Thereafter, Exchange failed to send a representative to the December mediation session, despite having been specifically alerted again by counsel that the court required the presence of such a representative. As a result, the trial court, Hon. Samuel H. Teller, judge trial referee, rendered a default judgment on the issue of liability against Health Specialists because Exchange failed to appear at the mandated mediation sessions on behalf of its insured. In March, 2007, Health Specialists and Susan Drown, individually and on behalf of Joshua Drown, executed a settlement agreement whereby Health Specialists agreed that it was liable for the full amount of the policy, $2 million, and that it would assign to the Drowns its rights to recover against Exchange. In return, the Drowns agreed that they would not proceed directly against Health Specialists' assets. The trial court, Agati, J., thereafter dismissed the action against Health Specialists pursuant to Practice Book § 14–19.
In April, 2008, Exchange, domiciled in the state of New Jersey, was declared insolvent by a judge in the Superior Court of New Jersey, Chancery Division. As a result, the association assumed liability for Exchange's obligations to the extent that claims under its policies were covered under the guaranty act, specifically General Statutes § 38a–841.
General Statutes § 38a–841(a) provides in relevant part: “Said association shall: (1) Be obligated to the extent of the covered claims existing prior to the determination of insolvency and arising within thirty days after the determination of insolvency, or before the policy expiration date if less than thirty days after the determination, or before the insured replaces the policy or causes its cancellation, if he does so within thirty days of such determination, provided such obligation shall be limited as follows: (A) With respect to covered claims for unearned premiums, to one-half of the unearned premium on any policy, subject to a maximum of two thousand dollars per policy; (B) with respect to covered claims other than for unearned premiums, such obligation shall include only that amount of each such claim which is in excess of one hundred dollars and is less than three hundred thousand dollars for claims arising under policies of insurers determined to be insolvent prior to October 1, 2007, and four hundred thousand dollars for claims arising under policies of insurers determined to be insolvent on or after October 1, 2007, except that said association shall pay the full amount of any such claim arising out of a workers' compensation policy, provided in no event shall said association be obligated (i) to any claimant in an amount in excess of the obligation of the insolvent insurer under the policy form or coverage from which the claim arises, or (ii) for any claim filed with the association after the expiration of two years from the date of the declaration of insolvency unless such claim arose out of a workers' compensation policy and was timely filed in accordance with section 31–294c; (2) be deemed the insurer to the extent of its obligations on the covered claims and to such extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent ... (4) investigate claims brought against said association and adjust, compromise, settle, and pay covered claims to the extent of said association's obligations, and deny all other claims. The association shall pay claims in any order it deems reasonable including, but not limited to, payment in the order of receipt or by classification. It may review settlements, releases and judgments to which the insolvent insurer or its insureds were parties to determine the extent to which such settlements, releases and judgments may be properly contested....”
Although § 38a–841 has been the subject of recent amendments by our legislature; see, e.g., Public Acts 2010, No. 10–5, § 40; those amendments have no bearing on the merits of this appeal. In the interest of simplicity, unless otherwise noted, we refer to the current revision of the statute.
In February, 2009, the association commenced the present declaratory judgment action, seeking a declaration that it had no obligations under the policy, which Exchange had issued to Health Specialists, for the Drowns' claims. The defendants filed counterclaims seeking declarations that: (1) the association was estopped from denying coverage by virtue of Exchange's breach of its duty to defend, failure to reserve its rights, and failure to honor its contractual obligations; (2) the policy provided coverage for the claims in the underlying action in the amount of $2 million; and (3) those claims are “ ‘[c]overed claim[s]’ ” under the guaranty act as defined by General Statutes § 38a–838 (5).
General Statutes § 38a–838 (5) provides in relevant part: “ ‘Covered claim’ means an unpaid claim, including, but not limited to, one for unearned premiums, which arises out of and is within the coverage and subject to the applicable limits of an insurance policy to which sections 38a–836 to 38a–853, inclusive, apply issued by an insurer, if such insurer becomes an insolvent insurer after October 1, 1971, and (A) the claimant or insured is a resident of this state at the time of the insured event; or (B) the claim is a first party claim for damage to property with a permanent location in this state....”
Thereafter, the association filed a motion for summary judgment on its declaratory action on the ground that exclusion (i) of the policy precluded coverage of the underlying claims and, therefore, the claims were not “ ‘[c]overed claim[s]’ ” as defined by § 38a–838 (5). The defendants filed a cross motion for summary judgment on the ground that the underlying claims were covered under the policy and that, therefore, the association was statutorily obligated to pay three covered claims to the Drowns in the amount of $1,199,700. The trial court denied the association's motion and granted the defendants' cross motion. The trial court concluded that both parties had offered reasonable interpretations of exclusion (i) and, therefore, the contract should be construed in accordance with the reasonable expectations of the insured that the claims would be covered. The trial court further concluded that Exchange's breach of its obligation to provide a defense had resulted in a default being entered against Health Specialists, and that the association was, therefore, liable to the same extent as Exchange would have been for such a breach. The trial court thereafter rendered summary judgment in favor of the defendants on both the association's complaint and the defendants' counterclaims.
For a complete recitation of the language of relevant policy provisions, see part II of this opinion.
The association appealed to the Appellate Court, which reversed the trial court's judgment. Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 159, 37 A.3d 820. In a unanimous decision, the Appellate Court concluded that exclusion (i) unambiguously precluded coverage for the vicarious liability claims asserted against Health Specialists. Id. at 156, 37 A.3d 820. The Appellate Court rejected the defendants' argument that exclusion (i) barred only a claim based on the negligence of a physician “ ‘for whom a premium charge is shown on the declarations page,’ ” concluding that this construction would contravene rules of grammar and the last antecedent rule of contractual or statutory construction. Id. at 149–52, 37 A.3d 820. The Appellate Court further concluded that the construction yielded upon application of these rules is supported by the definitions of persons insured under each coverage part. Id. at 151 n. 9, 37 A.3d 820. It also disagreed with the defendants' contention that the association's construction of exclusion (i) rendered Health Specialists' coverage under the policy illusory, noting that there were some circumstances in which claims predicated on vicarious liability would be covered. Id. at 152–54, 37 A.3d 820. Finally, the Appellate Court concluded that Exchange's breach of its duty to defend Health Specialists did not estop the association from enforcing the policy exclusion because, under the act, the association is liable only for “ ‘[c]overed claim[s]’ ” as defined by § 38a–838 (5). Id. at 156–59, 37 A.3d 820. Accordingly, the Appellate Court remanded the case to the trial court “with direction to deny the defendants' cross motion for summary judgment, to grant the association's motion for summary judgment and to render judgment thereon for the association.” Id. at 159, 37 A.3d 820. This certified appeal followed. See footnote 2 of this opinion.
On appeal, the defendants contend that the Appellate Court improperly determined that: (1) Exchange's pre-insolvency breach of its duty to defend did not estop the association from contesting its obligation to pay claims under the policy; and (2) exclusion (i) precluded coverage for the Drowns' vicarious liability claims against Health Specialists. We address each claim in turn.
I
We begin with the defendants' claim that the Appellate Court improperly concluded that Exchange's breach of its duty to defend Health Specialists, which occurred while Exchange was a solvent insurer, did not estop the association from challenging its obligations under the policy. The defendants contend that, under the guaranty act, the association stands in the shoes of Exchange, an insolvent insurer, and, therefore, is responsible to pay the remedy for Exchange's breach of its duty to defend, namely, the association's statutory liability for a portion of the $2 million coverage limits that formed the basis for the default judgment and settlement agreement between the Drowns and Health Specialists. See, e.g., Missionaries of Co. of Mary, Inc. v. Aetna Casualty & Surety Co., 155 Conn. 104, 114, 230 A.2d 21 (1967). The defendants rely on, inter alia, this court's recent decision in Connecticut Ins. Guaranty Assn. v. Fontaine, 278 Conn. 779, 789, 900 A.2d 18 (2006), which noted that the guaranty act does not “alter the usual methods of interpreting insurance policies,” and Hall v. MPH Transportation, Inc., 58 Pa. D. & C.4th 482, 502 (Pa.Com.Pl.2002), which stated that a guaranty association “inherits both the feats and sins committed by the former insurer while solvent and reaps the benefits of the insurer's achievements, and suffers the consequences of its transgressions, during its solvency.” In particular, the defendants cite Hall in support of their argument that “principles of basic fairness” preclude the association from “simply [ignoring Exchange's] breach of the duty to defend and the litigants' reasonable reliance on Judge Teller's default.”
In response, the association argues that the Appellate Court properly concluded that, under the guaranty act, specifically § 38a–841, it “cannot be held liable on account of acts or omissions of the insolvent insurer where there is no covered claim.” (Internal quotation marks omitted.) Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 159, 37 A.3d 820. The association then relies on the guaranty act's definition of “ ‘[c]overed claim’ ” in § 38a–838 (5), and this court's decision in Potvin v. Lincoln Service & Equipment Co., 298 Conn. 620, 640, 6 A.3d 60 (2010), to support its argument that it is not a “full service insurer”; accordingly, an insolvent insurer's “conduct in handling or mishandling a claim does not give rise to a covered claim” insofar as, under its statutory mandate, the association “can only be liable for a claim which arises out of and is within the coverage of the insolvent insurer's policy.” The association then argues that Connecticut Ins. Guaranty Assn. v. Fontaine, supra, 278 Conn. 779, 900 A.2d 18, is not controlling because that decision involved only whether the contra proferentem rule of construction applied in determining the association's obligations under a policy issued by an insolvent insurer, and did not concern the effect of the insurer's conduct on the association's obligations. It also claims that the Pennsylvania court's decision in Hall v. MPH Transportation, Inc., supra, 58 Pa. D. & C.4th at 482, is both unpersuasive and distinguishable. We agree with the association and, accordingly, conclude that Exchange's preinsolvency misconduct during the underlying litigation does not estop the association from challenging the existence of a covered claim, which is the predicate for its liability under the guaranty act.
By way of background, we note that the “association is a creature of statute, and any basis for liability must be found within the provisions of the guaranty act, which define the scope and extent of the association's liability.” Potvin v. Lincoln Service & Equipment Co., supra, 298 Conn. at 629, 6 A.3d 60. “ ‘The association was established for the purpose of providing a limited form of protection for policyholders and claimants in the event of insurer insolvency. The protection it provides is limited based upon its status as a nonprofit entity and the method by which it is funded. Specifically, the association is a nonprofit legal entity created by statute to which all persons licensed to transact insurance in the state must belong. See General Statutes §§ 38a–838 [7] and 38a–839. When an insurer is determined to be insolvent under § 38a–838 [6], the association becomes obligated pursuant to § 38a–841, to the extent of covered claims within certain limits.’ ” Esposito v. Simkins Industries, Inc., 286 Conn. 319, 329, 943 A.2d 456 (2008), quoting Hunnihan v. Mattatuck Mfg. Co., 243 Conn. 438, 451, 705 A.2d 1012 (1997). “Pursuant to ... § 38a–841, the association is authorized to pay only covered claims, and must deny all other claims. In order to be reimbursable by the association, a claim against the association must be encompassed within the definition of a covered claim....” Hunnihan v. Mattatuck Mfg. Co., supra, at 449, 705 A.2d 1012. The guaranty act defines the term “ ‘[c]overed claim,’ ” in relevant part, as “an unpaid claim, including, but not limited to, one for unearned premiums, which arises out of and is within the coverage and subject to the applicable limits of an insurance policy to which sections 38a–836 to 38a–853, inclusive, apply issued by an insurer, if such insurer becomes an insolvent insurer after October 1, 1971....” (Emphasis added.) General Statutes § 38a–838 (5).
Because this case does not involve a workers' compensation insurance policy, the association's maximum payment obligation is $400,000 for each claim. See General Statutes § 38a–841 (a)(1) ; see also footnote 3 of this opinion. In the present case, the Drowns asserted claims of $399,900 payable each to Susan Drown, Rodney Drown, and Joshua Drown, leading to a total obligation for the association of $1,199,700 should those claims be “covered.” Had Exchange not become insolvent, the settlement agreement would have entitled the Drowns to the total $2 million policy limits.
Insofar as the association's liability under the guaranty act is limited to “covered claims,” we agree with the Appellate Court that we must determine whether an insurer's preinsolvency conduct in treating a claim as covered by the policy operates to estop the association from revisiting that determination and enforcing its own contrary view of the policy provisions. See Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 159, 37 A.3d 820. As the Appellate Court noted, this issue presents a question of law guided by our well established process of statutory interpretation pursuant to General Statutes § 1–2z. See id. at 157, 37 A.3d 820. We do not, however, write on a “blank slate” in determining whether a potential liability constitutes a “ ‘[c]overed claim’ ” as defined by § 38a–838 (5), but instead, are guided by this court's previous decisions construing that provision. Esposito v. Simkins Industries, Inc., supra, 286 Conn. at 328, 943 A.2d 456 ; see also, e.g., New England Road, Inc. v. Planning & Zoning Commission, 308 Conn. 180, 186, 61 A.3d 505 (2013) (“in interpreting [statutory] language ... we do not write on a clean slate, but are bound by our previous judicial interpretations of this language and the purpose of the statute”).
Our recent decision in Potvin v. Lincoln Service & Equipment Co., supra, 298 Conn. at 620, 6 A.3d 60, is particularly instructive as to whether Exchange's preinsolvency conduct during the underlying litigation has the effect of estopping the association from challenging its liability under the policy. In Potvin, we first concluded that the association is statutorily immune, under General Statutes § 38a–850, from an order by a Workers' Compensation Commissioner imposing sanctions and attorney's fees pursuant to General Statutes §§ 31–288(b) and 31–300 for its undue delay in processing payment to a claimant on behalf of an insolvent insurer. See id. at 642, 6 A.3d 60. On the basis of that conclusion, we determined that “the association can be liable for those sanctions only if they fall within the meaning of the term ‘covered claim,’ as defined in § 38a–838 (5), which the association is required to pay under [General Statutes (Rev. to 2009) ] § 38a–841 (1).” Id. We then concluded that the Compensation Review Board improperly determined “that the definition of ‘[c]overed claim’ and our decision in [Connecticut Ins. Guaranty Assn. v. Fontaine, supra, 278 Conn. 779, 900 A.2d 18 ] demonstrate that the association is liable to the same extent as the insolvent insurer would have been, including for sanctions.” Potvin v. Lincoln Service & Equipment Co., supra, at 643, 6 A.3d 60.
In so concluding, we emphasized that the “relevant portion” of § 38a–838 (5) “confines the extent of a covered claim to that ‘which arises out of and is within’ the coverage of the underlying insurance policy.... The text of the definition thus excludes any liabilities beyond those that arise out of and are within the insolvent insurer's insurance policy. This reading is consistent with our decision in Fontaine, in which we noted that the association was obligated only ‘to the same extent that the insolvent insurer would have been liable under its policy.’ ... There is no evidence in the record that the insurance policy in the present case included an obligation on the part of the insurer to pay statutory penalties and attorney's fees in the event that it caused undue delay in the processing or payment of a claim. In the absence of such evidence, we conclude that the obligation to pay the sanctions does not arise out of the coverage of the policy but, rather, that such obligation arises out of the association's conduct in handling the claim. Thus, we conclude that the definition of ‘covered claim’ limits the association's obligations to those found in the insolvent insurer's insurance policy and does not extend to liabilities arising from conduct in handling the claim if such a provision is not included in the policy.” (Citations omitted; emphasis altered.) Id. at 643–44, 6 A.3d 60, citing Connecticut Ins. Guaranty Assn. v. Fontaine, supra, 278 Conn. at 791, 900 A.2d 18. Ultimately, this court concluded that, “[i]n the absence of any evidence that the sanctions imposed in this case were covered under the insolvent insurer's policy ... the sanctions are not part of a covered claim and that the association, therefore, is not obligated to pay them.”Potvin v. Lincoln Service & Equipment Co., supra, 298 Conn. at 646, 6 A.3d 60.
In Potvin, we distinguished and limited Connecticut Ins. Guaranty Assn. v. Fontaine, supra, 278 Conn. at 791, 900 A.2d 18, rejecting the association's reliance on the language presently set forth in § 38a–841 (a)(2) ; see footnote 3 of this opinion; in support of the broad proposition “that the association is liable to the same extent as any insolvent insurer would be if that insurer had not become insolvent.” Potvin v. Lincoln Service & Equipment Co., supra, 298 Conn. at 644, 6 A.3d 60. We held instead that “[t]he statute ... deems the association to be the insurer only ‘to the extent of its obligations on the covered claims.... ’ ” (Emphasis added.) Id. at 645, 6 A.3d 60 ; see also id. (“because we already have determined that the sanctions in the present case do not fall within the definition of ‘covered claim’ in § 38a–838 [5], the association is not ‘deemed the insurer’ for purposes of any sanctions imposed by the commissioner”).
By way of background, we note that, in Fontaine, we rejected the association's claim that the contra proferentem rule, which generally requires construing ambiguous insurance contracts against the drafter, was inapplicable because the association itself did not draft the policy issued by the insolvent insurer. Connecticut Ins. Guaranty Assn. v. Fontaine, supra, 278 Conn. at 789, 900 A.2d 18. This court observed that the “association does not point to any provision of the act purporting to alter the usual methods of interpreting insurance policies” and rejected its reliance on the history and limited purpose of the association stated in Hunnihan v. Mattatuck Mfg. Co., supra, 243 Conn. at 451, 705 A.2d 1012, emphasizing that the association “was established for the benefit of consumers.” (Internal quotation marks omitted.) Connecticut Ins. Guaranty Assn. v. Fontaine, supra, at 789–90, 900 A.2d 18 ; see also id. at 791–92, 900 A.2d 18, citing Connecticut Ins. Guaranty Assn. v. Union Carbide Corp., 217 Conn. 371, 390, 585 A.2d 1216 (1991) (“ ‘the legislative objective was to make the [association] liable to the same extent that the insolvent insurer would have been liable under its policy ’ ” [emphasis added] ).
We conclude that Potvin is highly instructive with respect to determining the association's liability to Health Specialists and the Drowns because the default judgment and corresponding settlement agreement in the underlying malpractice action arose from a judicially imposed sanction of Exchange for its conduct in defending that litigation, namely, the imposition of a default judgment on Health Specialists as a consequence of Exchange's violation of two separate court orders requiring the attendance of a representative with settlement authority at pretrial mediation sessions scheduled for September and December of 2006. Potvin makes clear that the association's liability is strictly limited by the guaranty act to claims grounded in the terms of the policy issued by the insolvent insurer, in this case Exchange, particularly insofar as Potvin distinguished this court's earlier decision in Fontaine and limited it to matters of policy interpretation. See footnote 7 of this opinion. Indeed, in Potvin, we held that the association could not be held liable, either independently or by means of a covered claim, for a sanction imposed by a Workers' Compensation Commissioner when the association itself had committed misconduct in the course of handling a claim on behalf of an insolvent insurer; Potvin v. Lincoln Service & Equipment Co., supra, 298 Conn. at 646 ; that fact distinguishes it from the present case, where the defendants seek, in essence, to hold the association vicariously liable for the misconduct of Exchange, the insolvent insurer.
Further, our conclusion that an insurer's preinsolvency conduct does not estop the association from challenging its obligation to pay under the terms of the policy is consistent with the association's “limited purpose of paying only ‘covered’ claims on behalf of insolvent insurers to insureds who otherwise would be left with a limited recovery, if any, following the insolvency of their insurer.... The association does not replace the insolvent insurer and does not assume all of the insolvent insurer's responsibilities and obligations. The guaranty act limits the extent of the association's obligations so that the association remains a limited purpose entity rather than a full service insurer.” (Citation omitted.) Id. at 639–40, 6 A.3d 60. “The protection [the association] provides is limited based [on] its status as a nonprofit entity and the method by which it is funded.... [T]he association becomes obligated pursuant to § 38a–841, to the extent of covered claims within certain limits.... Because [General Statutes] § 38a–849 provides that insurers may pass on the costs of the assessments made against them by the association, it is in reality policyholders who pay for the protections afforded by the association. Limitations on the association's obligations, therefore, provide another form of protection against increased premiums for policyholders in addition to the primary protection afforded all claimants against losses resulting from insurer insolvency.... The result is that policyholders, who in effect fund the association, pay only for protection for fellow policyholders and claimants in the event that an insurer becomes insolvent.” (Citations omitted; internal quotation marks omitted.) Id. at 640, 6 A.3d 60 ; see also Esposito v. Simkins Industries, Inc., supra, 286 Conn. at 329–31, 943 A.2d 456 ; Hunnihan v. Mattatuck Mfg. Co., supra, 243 Conn. at 450–52, 705 A.2d 1012. Thus, we conclude that the association is not estopped from challenging the existence of a covered claim, even when the insolvent insurer would otherwise have been bound to pay that claim because of a breach of its coverage obligation.
We recognize the defendants' policy based argument—framed by this court's statement in Connecticut Ins. Guaranty Assn. v. Fontaine, supra, 278 Conn. at 791, 900 A.2d 18, that the association is obligated only “ ‘to the same extent that the insolvent insurer would have been liable under its policy’ ”—that upholding the Appellate Court's decision “would mean that [the association] is immune from the legal principles that ordinarily govern determination of insurance coverage. Instead, [the association] would be the one entity in the legal system who could always defend on policy interpretation grounds, regardless of the prior conduct of a solvent insurance company. For example, even where a solvent insurance company had previously adjusted and settled a claim, so long as the check was not yet cashed, [the association] could step in and defend on policy interpretation grounds. In this case, [the association] simply wants to ignore the six year history of [Exchange's] conduct during the underlying litigation and the Appellate Court's grant of immunity to [the association] allows it to do precisely that.” The defendants further contend that this conclusion “can upset the reasonable expectations of litigants, as it did in this case. Since any insurance company could conceivably become insolvent at any time, any contract or default judgment involving an insurance company would be useless until the settlement check cleared. [The association] could always come in, turn back the clock, and deny coverage on policy interpretation grounds. Under this system, litigants cannot effectively plan, and lawyers cannot protect their clients' interests, because the rules could change at any moment. There needs to be some continuity between an insurance company and [the association] if the system is to function properly.”
First, we conclude that the defendants' arguments, including that the Appellate Court “invented its own questionable policy assumption—that the [guaranty act] was designed primarily to benefit consumers of insurance, i.e., policyholders,” are inconsistent with the association's limited statutory purpose, which has been well established in our case law. See, e.g., Esposito v. Simkins Industries, Inc., supra, 286 Conn. at 329–31, 943 A.2d 456 ; Hunnihan v. Mattatuck Mfg. Co., supra, 243 Conn. at 450–52, 705 A.2d 1012.
Second, the legislature, in enacting the guaranty act, contemplated some degree of instability in the expectations of parties following the default or failure to defend by an insolvent insurer, as General Statutes § 38a–851 (a) expressly permits the association to ask a court to set aside the resulting “judgment, order, decision, verdict or finding” to allow it to “defend against any such claim on the merits of the case.” Section 38a–851 (a) limits this authority, however, to “covered claims.” It would be wholly inconsistent with the purpose of the guaranty act, and an absurd result, to permit the association to move for the reopening of “covered claims,” yet bind it to pay those claims outside the coverage of the policies issued by the insolvent insurer.
Finally, we note that this case simply does not present the factual scenario posited by the defendants, where the “rules ... change at any moment,” inhibiting attorneys from “protect[ing] their clients' interests....” The record demonstrates that the Drowns were aware of the coverage issues prior to entering into the settlement agreement with Health Specialists, which allowed them to proceed directly against Exchange, and ultimately the association given the insolvency of Exchange, while giving up their right to proceed against Health Specialists' assets. See Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 145 and n. 4, 37 A.3d 820.
None of the cases cited by the defendants hold to the contrary. In particular, their reliance on Connecticut Ins. Guaranty Assn. v. Fontaine, supra, 278 Conn. at 791, 900 A.2d 18, is foreclosed by our treatment of that case in Potvin v. Lincoln Service & Equipment Co., supra, 298 Conn. at 643–44, 6 A.3d 60. See footnote 7 of this opinion. We similarly disagree with their reliance on Hall v. MPH Transportation, Inc., supra, 58 Pa. D. & C.4th at 501, wherein a Pennsylvania trial court held that, under the applicable statute, a guaranty association had “an unconditional right to set aside a default judgment which occurred during the insurer's rehabilitation or insolvency and while the insurer and defendant were incapable of defending the claim on the merits. The same should not be true, however, for default judgments or verdicts that were entered at a time when the defendant and then solvent insurer had the ability to defend the claim and protect their interests.” In that context, the Pennsylvania court reasoned that the guaranty association “inherits both the feats and sins committed by the former insurer while solvent and reaps the benefits of the insurer's achievements, and suffers the consequences of its transgressions, during its solvency. For example, if [the insolvent insurer] had succeeded with [the insured's] preliminary objections and secured the dismissal of certain claims, [the guaranty association] would have been entitled to enjoy the benefit of that ruling. Conversely, if [the] plaintiffs have obtained a default judgment due to the failure of [the insured] and [the insolvent insurer] to timely answer the complaint while [the insolvent insurer] was still solvent, [the guaranty association] should not be granted the unfettered right to set aside that judgment at any time it chooses. If [the guaranty association] is truly deemed to be an insurer and is placed in the stead of the insolvent insurer, with all of that insurer's rights and duties and obligations ... it should not be entitled to shirk responsibility for the insurer's conduct while it was solvent. To hold otherwise would defeat the [Pennsylvania's guaranty act's] express purpose of avoiding excessive delay in the payment of such claims.” (Citation omitted; internal quotation marks omitted.) Id. at 502.
The statute at issue in Hall “addresses default judgments which have been entered against the insolvent insurer and provides:
“ ‘As to any covered claims arising from a judgment under any decision, verdict or finding based on the default of the insolvent insurer or its failure to defend an insured, the association, either on its own behalf or on behalf of such insured, may apply to have such judgment, order, decision, verdict or finding set aside by the same court that made such judgment, order, decision, verdict or finding and shall be permitted to defend against such claim on the merits.’ ” Hall v. MPH Transportation, Inc., supra, 58 Pa. D. & C.4th at 495, quoting 40 Pa. Stat. Ann. § 991.1819(b) (West 2002).
The Pennsylvania court deemed that interpretation consistent with statutory language; see footnote 9 of this opinion; that “refers to judgments ‘based on the default of the insolvent insurer’ and implies that the default took place while the insurer was ‘insolvent’ and unable ‘to defend an insured,’ rather than when it was solvent and simply unwilling to do so.” (Emphasis omitted.) Hall v. MPH Transportation, Inc., supra, 58 Pa. D. & C.4th at 501.
Even assuming, without deciding, that the default and ultimate settlement agreement between the Drowns and Health Specialists constitute a “judgment” subject to reopening under General Statutes § 38a–851 (a), which is Connecticut's counterpart of the statute at issue in Hall; see footnote 9 of this opinion; we agree with the association that Hall is not persuasive in this context. Rather, Hall is simply limited to the procedure by which judgments may be reopened, and is of minimal persuasive value because it does not address the threshold question whether an insolvent insurer's litigation conduct vis-á-vis its insured, including breaching its duty to defend or not timely reserving its rights under the policy, operates as an estoppel that creates a “covered claim” as a matter of law—regardless of the policy language involved. Indeed, we agree with the association that there is nothing in § 38a–851 (a) that alters the guaranty act's definition of “covered claim” in § 38a–838 (5), which moors the association's liability to claims that require “a set of facts and a right of recovery that arises out of and is within the coverage of the insolvent insurer's policy.”
General Statutes § 38a–851(a) provides in relevant part: “Whenever any covered claims arise from a judgment under any decision, verdict or finding based on the default of an insolvent insurer or based on such insolvent insurer's failure to defend an insured, said association, either on its own behalf or on behalf of such insured, may apply to have such judgment, order, decision, verdict or finding set aside by the same court or administrator that made such judgment, order, decision, verdict or finding and said association may defend against any such claim on the merits of the case.”
Thus, like the Appellate Court; see Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 158 n. 12, 37 A.3d 820 ; we find more persuasive those sister state decisions holding squarely that the conduct of an insolvent insurer does not bind an insurance guaranty association to pay an otherwise “uncovered claim.” See
“Sister state decisions are helpful in construing and applying the guaranty act because it is based on a model statute drafted by the National Association of Insurance Commissioners that has been adopted in substantial part by the legislatures of many of our sister states....” (Internal quotation marks omitted.) Connecticut Ins. Guaranty Assn. v. Fontaine, supra, 278 Conn. at 792 n. 8, 900 A.2d 18.
Illinois Ins. Guaranty Fund v. Santucci, 384 Ill.App.3d 927, 934, 323 Ill.Dec. 775, 894 N.E.2d 801 (2008) (“[The defendant] ignores [the fact] that the [guaranty fund] is not an insurance company and that [the insurer's] decision to defend without a reservation of rights does not bind the [guaranty fund]. Rather, by statute, the [guaranty fund] assumed the policy obligations of [the insurer] only to the extent that those obligations were statutorily defined ‘covered claims.’ ”); Valentin–Rivera v. New Jersey Property–Liability Ins. Guaranty Assn., Docket No. A–1925–09T1, 2011 WL 1085559, *6 (N.J.Super.App.Div. March 25, 2011) (insolvent insurer's defense without reserving rights did not estop guaranty association from challenging existence of “covered claim” because, inter alia, “conservation of [guaranty fund's] resources is necessary to achieve the [state guaranty act's] stated goals” [internal quotation marks omitted] ); Lopez v. Texas Property & Casualty Ins. Guaranty Assn., 990 S.W.2d 504, 506 (Tex.App.1999) (“Because [the] appellants' claim is for a loss outside policy coverage, [the] appellants' claim for recovery of the judgment against [the insured] is not a covered claim under the terms and conditions of the policy. Therefore, the [g]uaranty [a]ssociation is [statutorily] prohibited from paying [the] appellants' claim,” despite the fact that the insolvent insurer had defended the insured during the underlying action without reserving its rights.); accord Property & Casualty Ins. Guaranty Corp. v. Beebe–Lee, 431 Md. 474, 487, 66 A.3d 615 (2013) (that claim is not covered by insolvent insurer's policy provides “sound reason” for guaranty association to contest settlement).
Our independent research has revealed some authority that provides limited support for the proposition that an insolvent insurer's conduct may operate to estop a guaranty association from challenging its coverage obligation under the policy, even under statutes requiring the existence of a “covered claim” to bind the association. See California Ins. Guarantee Assn. v. Workers' Compensation Appeals Board, 10 Cal.App.4th 988, 998, 12 Cal.Rptr.2d 848 (1992) (workers' compensation coverage obligation for insolvent insurer, created by estoppel because of agent's conduct representing that coverage existed creating oral binder of insurance, operated to bind guaranty association because obligations of insolvent insurer included those created by law as well as policy). The Delaware Court of Chancery subsequently followed this California decision by estopping that state's guaranty association from refusing to defend an insured who had relied on the conduct of his insolvent insurer in defending him for more than four years without a reservation of rights or disclaiming coverage. See Delaware Ins. Guaranty Assn. v. Sezna, Docket No. Civ. A. 13070, 1994 WL 476166, *4 (Del.Ch. August 25, 1994) (holding “claim by estoppel is not expressly excluded from coverage” by statute defining “covered claim,” and, “moreover, is encompassed within the meaning of and purpose behind the [state's guaranty act]”), aff'd, 659 A.2d 227 (Del.1995).
In our view, these decisions are unpersuasive. The Delaware decision does not square its estoppel reasoning with the statutory definition of “covered claim,” which has the same limitation as Connecticut's definition under § 38a–838 (5), “which arises out of and is within the coverage”; Del.Code Ann. tit. 18, § 4205(6) (West 1994); but lacks the arguably broader language of California's definition, which refers to obligations “imposed by law and within the coverage of an insurance policy of the insolvent insurer....” (Emphasis added.) Cal. Ins.Code § 1063.1(c) (Deering 2009). Indeed, the 1992 California decision has been significantly narrowed by a subsequent decision, and held to apply only to workers' compensation policies, rather than other forms of insurance. See Aloha Pacific, Inc. v. California Ins. Guarantee Assn., 79 Cal.App.4th 297, 314, 93 Cal.Rptr.2d 148 (2000) (noting that 1992 decision “does not hold that every estoppel affixed to an insolvent insurer will also be imposed upon [guaranty association]” [emphasis omitted] ). Thus, we decline to follow these decisions.
We also note that a very recent decision from Maryland's highest court, Property & Casualty Ins. Guaranty Corp. v. Beebe–Lee, supra, 431 Md. at 483–85, 66 A.3d 615, concerns when a guaranty association may “properly contest” a personal injury settlement entered into by an insurer prior to insolvency, as opposed to remaining obligated to continue to defend and pay. In discussing the lack of coverage under the policy as a ground for contesting a settlement, the Maryland court distinguished Lopez v. Texas Property & Casualty Ins. Guaranty Assn., supra, 990 S.W.2d at 504, and Illinois Ins. Guaranty Fund v. Santucci, supra, 384 Ill.App.3d 927, 323 Ill.Dec. 775, 894 N.E.2d 801, as involving either a stipulation or a judicial finding that the claims at issue were not “covered claims” under the policy and guaranty association statute, although it described that as a “sound reason” to contest the settlement. See Property & Casualty Ins. Guaranty Corp. v. Beebe–Lee, supra, at 487 and n. 15. The court held that the state's guaranty act permitted the guaranty association “to review and properly contest settlements to the extent that the insolvent insurer could have had it not become insolvent. In addition, [the guaranty association] may contest settlements on limited grounds that would not have been available to the insurer. Once a claimant demonstrates that there has been a valid settlement, [the guaranty association] bears the burden of showing why the claim is excluded from coverage. These reasons include, but are not necessarily limited to, fraud, collusion, duress, mutual mistake, or the failure of the insurer to use reasonable care in investigating or settling the claim.” Id. at 493–94. Although this holding strongly suggests that lack of coverage is a reason for a guaranty association to contest a settlement, the Maryland court acknowledged, but did not address, the guaranty association's claim that the go-kart accident at issue was not covered under the applicable policies, concluding only that the facts demonstrated that the insolvent insurer had used “reasonable care” in evaluating the merits of the underlying case prior to settling it. See id. at 493 (“[j]ust because [the guaranty association] might have been able to negotiate a better settlement or successfully defend the case at trial does not mean it can re-open the settlement agreement now”).
Like these sister state courts, we view expanding the definition of “covered claim” to bind the association, by estoppel, to make payments occasioned by the default of an insolvent insurer, when no coverage existed under the underlying policy issued by the insolvent insurer, as inconsistent with the association's limited purpose under the guaranty act. We conclude, therefore, that the Appellate Court properly determined that the “association is not estopped from enforcing the policy provisions.” Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 159, 37 A.3d 820.
II
We now turn to the defendants' claim that the Appellate Court improperly concluded that exclusion (i), which excludes vicarious liability coverage “with respect to injury arising solely out of acts or omissions in the rendering or failure to render professional services by individual physicians or nurse anesthetists, or by any paramedical for whom a premium charge is shown on the declarations page, ” plainly and unambiguously precludes coverage for the Drowns' claims against Health Specialists. (Emphasis added.) Noting that the Drowns' claims arise from Health Specialists' vicarious liability for the malpractice of Bourget, who is a physician not named on the declarations page, the defendants argue that exclusion (i) is ambiguous with respect to whether it applies to all claims arising solely from the negligence of physicians, or merely those physicians who are not named on the declarations page; thus, they contend that the policy, in accordance with the reasonable expectation of the insured under the contra proferentem rule, should be construed in favor of coverage. In demonstrating ambiguity, the defendants rely on condition (g) set forth in § VIII of the policy, which requires that individual physicians have their own personal coverage as a precondition to corporate coverage, to indicate that the policy contemplates coverage for vicarious liability arising from the acts of individual physicians who are not named on the declarations page. They argue that a contrary reading of the policy, and particularly exclusion (i), renders the coverage afforded by the policy illusory because “it does not make sense for an obstetrical medical group to buy a policy with no coverage for doctor malpractice,” asking rhetorically why “such a group [would] leave itself completely exposed to vicarious liability claims based on its main liability (that of its physicians).” The defendants further argue that the association's construction of exclusion (i) does not satisfy Johnson v. Connecticut Ins. Guaranty Assn., 302 Conn. 639, 31 A.3d 1004 (2011), which, they contend, stands for the proposition that, “where the interpretation offered by an insurer creates ‘bizarre’ and ‘counterintuitive’ results from the perspective of the insured, such an interpretation should only prevail where the language ‘unambiguously and inexorably’ leads to such a conclusion.”
In response, the association, relying on sister state cases from New Jersey and Massachusetts, argues that the Appellate Court properly concluded that exclusion (i) plainly and unambiguous precludes coverage in this case. The association contends that there is nothing in the language, grammar, or syntax of exclusion (i) that suggests any ambiguity, and argues that the Appellate Court properly applied the last antecedent rule of construction to conclude that exclusion (i) plainly and unambiguously precludes coverage for claims arising “solely” from the malpractice of individual physicians, regardless of whether they are named on the declarations page of the policy. The association argues that the Appellate Court properly construed the policy as a whole to avoid conflicts between exclusion (i) and conditions of coverage, and also that coverage under the policy is not illusory because there are numerous situations wherein the exclusion would not apply. Largely for the reasons well stated by the Appellate Court, we agree with the association that the policy purchased by Health Specialists plainly and unambiguously excluded vicarious liability coverage “with respect to injury arising solely out of acts or omissions in the rendering or failure to render professional services by individual physicians,” insofar as it is undisputed that the claims at issue herein against Health Specialists arose solely from the actions of Bourget, its employee who is an individual physician, whose name is not recited on the policy's declaration page. See Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 152–54, 37 A.3d 820.
To provide context for our analysis of the contract interpretation issues in this appeal, we set forth the relevant provisions of the “Physicians' & Surgeons' Professional Liability Insurance Claims—Made” policy that Exchange issued to Health Specialists. The declarations page provides in relevant part:
“I. COVERAGE AGREEMENTS
“[Exchange] will pay on behalf of [Health Specialists] all sums that [Health Specialists] shall become legally obligated to pay as damages because of:
* * *
“Coverage B—Corporate/Partnership Liability
“Injury arising out of the rendering of or failure to render, on or after the retroactive date, professional services by any person for whose acts or omissions the corporation/partnership insured is legally responsible.”
The “Exclusions” section of the policy provides in relevant part:
“II. EXCLUSIONS
“This insurance does not apply to liability of [Health Specialists]:* * *
“(i) corporation/partnership under Coverage Agreement B with respect to injury arising solely out of acts or omissions in the rendering or failure to render professional services by individual physicians or nurse anesthetists, or by any paramedical for whom a premium charge is shown on the declarations page. ” (Emphasis added.)
Section VIII of the policy, entitled “CONDITIONS OF INSURANCE,” further provides:
“(g) Insurance for Others Required. The coverage provided under this policy shall not apply to any individual, partnership or corporation insured with respect to claims arising out of the acts or omissions of: (a) physician or nurse anesthetist employees of an individual, partnership or corporation insured, or (b) members of an insured partnership or officers, directors or shareholders of an insured corporation, unless such persons have individual coverage for such claims at the time they are made under a physicians' and surgeons' or similar professional liability insurance policy with limits of liability equal to or greater than the limits of liability of the insured under this policy.”
“Under our law, the terms of an insurance policy are to be construed according to the general rules of contract construction.... The determinative question is the intent of the parties, that is, what coverage the ... [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy.... If the terms of the policy are clear and unambiguous, then the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning.... However, [w]hen the words of an insurance contract are, without violence, susceptible of two [equally reasonable] interpretations, that which will sustain the claim and cover the loss must, in preference, be adopted.... [T]his rule of construction favorable to the insured extends to exclusion clauses....
“Put differently, [a]lthough policy exclusions are strictly construed in favor of the insured ... the mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous.... The interpretation of an insurance policy is based on the intent of the parties, that is, the coverage that the insured expected to receive coupled with the coverage that the insurer expected to provide, as expressed by the language of the entire policy.... The words of the policy are given their natural and ordinary meaning, and any ambiguity is resolved in favor of the insured.... The court must conclude that the language should be construed in favor of the insured unless it has a high degree of certainty that the policy language clearly and unambiguously excludes the claim.” (Citations omitted; internal quotation marks omitted.) Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., 290 Conn. 767, 795–96, 967 A.2d 1 (2009). These principles of policy construction, which embody the rule of contra proferentem, continue to apply even when the association is challenging a coverage obligation under a policy that had been written and issued by a now insolvent insurer. Connecticut Ins. Guaranty Assn. v. Fontaine, supra, 278 Conn. at 789–91, 900 A.2d 18.We agree with the Appellate Court's well reasoned conclusion that exclusion (i) applied, despite the fact that Bourget's name was not shown on the declarations page, because the qualifying phrase, “ ‘for whom a premium charge is shown on the declarations page’ in exclusion (i) does not apply to individual physi cians....” Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 152, 37 A.3d 820. The Appellate Court, inter alia, properly applied the last antecedent rule of contractual and statutory construction, which provides that “qualifying phrases, absent a contrary intention, refer solely to the last antecedent in a sentence”; id. at 151, 37 A.3d 820 ; and observed that “the phrase ‘for whom a premium charge is shown on the declarations page’ is not grammatically or logically separated from the last antecedent phrase ‘any paramedical,’ ” and “interpret[ed] the phrase to apply only to the last antecedent, ‘any paramedical.’ ” Id.
As the Appellate Court aptly observed, the “use of a comma, the repeated use of the disjunctive conjunction ‘or’ and the repeated use of the word ‘by’ grammatically separates the portion of exclusion (i) referring to individual physicians and nurse anesthetists from the portion of exclusion (i) referring to paramedicals. In light of this separation, we read the phrase ‘for whom a premium charge is shown on the declarations page’ to modify only the ‘paramedical’ category. ‘It is well recognized that, whenever possible, a modifier should be placed next to the word it modifies.’ ... Moreover, ‘the use of the disjunctive conjunction “or” unambiguously requires that either of the exclusions separated by the conjunction, if applicable, excludes coverage.’ ” (Citations omitted; emphasis omitted.) Id. at 150–51, 37 A.3d 820 ; see also Harris Data Communications, Inc. v. Heffernan, 183 Conn. 194, 197, 438 A.2d 1178 (1981) ; Horak v. Middlesex Mutual Assurance Co., 181 Conn. 614, 616–17, 436 A.2d 783 (1980).We agree with the dissent that, as a general matter, principles such as the last antecedent rule, as well as considerations such as the placement of punctuation; see, e.g., Chandler–McPhail v. Duffey, 194 P.3d 434, 440–41 (Colo.App.2008) ; Liebovich v. Minnesota Ins. Co., 310 Wis.2d 751, 771–72, 751 N.W.2d 764 (2008) ; are merely means to an ultimate end, which is to determine the intent of the parties to the insurance contract, with the understanding that the “[t]he provisions of the policy issued by the defendant cannot be construed in a vacuum.... They should be construed from the perspective of a reasonable layperson in the position of the purchaser of the policy.” (Internal quotation marks omitted.) Community Action for Greater Middlesex County, Inc. v. American Alliance Ins. Co., 254 Conn. 387, 400, 757 A.2d 1074 (2000). The Appellate Court's application of the last antecedent rule in this case was not, as the dissent suggests, an improperly hypertechnical approach to contract interpretation that superseded a reasonable, contextual reading of an insurance contract. Rather, the Appellate Court properly applied the last antecedent rule to yield a construction that is consistent with a broader, contextual reading of the insurance contract.
Thus, we disagree with the dissent's argument that the Appellate Court's construction of the policy “seems counterintuitive in its real world application,” given that “[n]either [we], nor the Appellate Court, nor the association has offered a reasonable explanation as to why Health Specialists, or any other obstetrical practice for that matter, would purchase a corporate liability policy that would exclude from coverage for the most obvious source of its potential liability, the negligence of its physicians, under most circumstances.” To this end, the defendants and the dissent contend that condition (g) renders the Appellate Court's reading of exclusion (i) improper because, when the condition and the exclusion are read together, they suggest that vicarious liability coverage under the policy is illusory. We respectfully disagree with this reading of the policy language.
We specifically disagree with the dissent's reliance on the title of the policy, namely, “Physicians and Surgeons Professional Liability Claims Made Insurance,” in support of its argument that the policy is ambiguous. The dissent contends that this title, along with the broad grant of coverage in coverage B for “[i]njury arising out of the rendering of ... professional services by any person for whose acts or omissions the corporation/partnership [Health Specialists] is legally responsible,” “seem [s] to suggest that coverage for such persons is precisely the policy's main purpose.” (Emphasis omitted.) The title of an insurance policy cannot, however, be used to create ambiguity within the plain and unambiguous terms of the contract. See Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., supra, 290 Conn. at 808, 967 A.2d 1 (exclusion for damage, injury, or illness claims “ ‘aris[ing] from ... silica dust’ ” not rendered ambiguous by fact that title of that exclusion was “Asbestos Exclusion Endorsement,” with no mention of silica).
As noted previously, condition (g) requires the maintenance of individual professional liability coverage for physician or nurse anesthetist employees as a condition for vicarious liability coverage. Read in conjunction with exclusion (i), condition (g) does not, however, render illusory the vicarious liability coverage provided by coverage B on the declarations page of the policy (coverage B). First, condition (g) is written more broadly than exclusion (i)—it requires individual coverage as a condition precedent for corporate coverage for all “claims arising out of the acts or omissions of: (a) physician or nurse anesthetist employees of an individual, partnership or corporation insured....” In contrast, exclusion (i) excludes only those vicarious liability claims for “injury arising solely out of acts or omissions in the rendering or failure to render professional services by individual physicians or nurse anesthetists, or by any paramedical for whom a premium charge is shown on the declarations page.” (Emphasis added.) Given the differences in their wording, these sections can be harmonized in a coherent manner rendering coverage nonillusory because the wording of exclusion (i) is narrower than that of condition (g) and the general grant of coverage in coverage B.
Specifically, the term “solely” in exclusion (i) makes clear that the involvement of a physician or nurse anesthetist in the events giving rise to a claim arising in whole or in part from the actions of an unscheduled paramedical would not preclude corporate coverage, while the remainder of the exclusion makes clear that coverage B cannot be used as a means to avoid the purchase of adequate individual professional liability coverage for those named in the exclusion, namely, physicians, nurse anesthetists, or scheduled paramedical personnel. This means that, viewing these provisions together, the corporate protection in coverage B is not rendered illusory because it encompasses claims wherein an unscheduled paramedical acted, with or without the participation of a physician or nurse anesthetist, to cause injury in the course of rendering or failing to render professional service. It plainly and unambiguously covers a certain risk for Health Specialists, namely, its vicarious liability for the acts and omissions of unscheduled paramedical personnel such as nonanesthetist nurses and physician's assistants, who have liability exposure or legal obligations that puts them beyond the realm of those providers who are required to carry malpractice coverage. See General Statutes § 20–11b (a) (requiring licensed physicians and surgeons who provide “direct patient care services” to “maintain professional liability insurance or other indemnity against liability for professional malpractice” for at least $500,000 “for one person, per occurrence, with an aggregate of not less than one million five hundred thousand dollars”); General Statutes § 20–94c (a) (same requirement for advanced practice registered nurses, except for certified nurse anesthetists who provide “such services under the direction of a licensed physician”); see also footnote 11 of the dissenting opinion.Thus, we do not read the relationship between exclusion (i) and condition (g) as having the counterintuitive effect—namely, creating illusory coverage—claimed by the defendants.
Indeed, as the association argues and the Appellate Court noted; see Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 154, 37 A.3d 820 ; this conclusion is consistent with that of those limited sister state courts that have considered the question presented in the present appeal in interpreting insurance policies with identical language. See Massachusetts Insurers Insolvency Fund v. Mountzuris, Docket No. 081962B, 2009 WL 1663932, *3 n. 9 (Mass.Super. April 21, 2009) (The court concluded that language identical to exclusion [i] did “not eliminate all coverage based on vicarious liability ... but rather eliminates such coverage only where an injury arises solely out of acts or omissions by the persons identified in the provision. Conversely, then, the exclusion does not bar coverage for [the insured] in situations where an injury does not arise solely out of acts or omissions by the identified persons. The [c]ourt need not speculate as to what those situations might be; it is satisfied that the exclusion does not by its terms render ... coverage under the policy illusory.” [Emphasis omitted.] ); Valentin–Rivera v. New Jersey Property–Liability Ins. Guaranty Assn., supra, 2011 WL 1085559, *5 (concluding that “the grant of coverage ... is broader than the exclusion since it provides coverage for the acts or omissions of, for example, a nurse or physician's assistant employed by [the insured]” and that “the coverage provided, when read in conjunction with the plain language of the exclusion and the policy as a whole, was not illusory”).
We further disagree with the dissent's conclusion that our construction of the policy “appears to render the term ‘individual’ superfluous.” If correct, such a reading would, of course, contravene the well established method of reading insurance policies. See, e.g., R.T. Vanderbilt Co. v. Continental Casualty Co., 273 Conn. 448, 468, 870 A.2d 1048 (2005). We view the word “individual” as used in exclusion (i) to modify the words “physicians and nurse anesthetists,” as needing to be read consistently with condition (g), which requires “individual coverage” for such providers as a condition of coverage for Health Specialists' vicarious liability arising from their negligence, which was available through the purchase from Exchange of coverage A on the declarations page (coverage A) for “[i]ndividual [p]rofessional [l]iability.” It also makes clear the difference between the coverage in coverage A, and that in coverage B, which specifically protects “a partnership ... and any member thereof with respect to acts or omissions of others.” Put differently, the word “individual” operates in the policy to emphasize the difference between a physician's liability for services rendered in his or her capacity as a health care provider, and a physician's vicarious liability as a member of a partnership.
Coverage A defines “[i]ndividual [p]rofessional [l]iability” coverage as encompassing “[i]njury arising out of the rendering of or failure to render ... professional services by the individual insured, or by any person for whose acts or omissions such insured is legally responsible, except as a member of a partnership....” Read in context with the definitions of “[i]nsured” in § VI and “PERSONS INSURED” set forth in § III, an “individual” under coverage A is a human being who provides professional services, but is not a “paramedical employee,” as compared to coverage B, which protects business entities such as corporations or partnerships.
Finally, the defendants' reliance on Johnson v. Connecticut Ins. Guaranty
Assn., supra, 302 Conn. at 639, 31 A.3d 1004, is misplaced. Although that case also involved language identical to exclusion (i), it is distinguishable. In Johnson, we concluded that the language of exclusion (i) was ambiguous as applied in that case, which involved whether coverage existed for claims arising solely from the negligence of a paramedical employee; the issue therein was whether she was a “ ‘paramedical for whom a premium charge is shown on the declarations page.’ ” (Emphasis omitted.) Id. at 644–45, 31 A.3d 1004. We construed the policy in favor of coverage because the declarations page simply noted “ ‘included’ ” with respect to a premium for coverage for paramedical employees as a class; we stated the use of that term “does not ambiguously show a premium charge for that class on the declarations page.” Id. at 651–52, 31 A.3d 1004. Because of differences in the language at issue, Johnson does not control or significantly inform our decision in the present case.Accordingly, we conclude that the Appellate Court properly determined that the policy is not illusory, and plainly and unambiguously does not cover Health Specialists for its vicarious liability arising solely from the acts or omissions of its physicians.
The judgment of the Appellate Court is affirmed.
In this opinion ROGERS, C.J., and PALMER, ZARELLA and ESPINOSA, Js., concurred.
ROGERS, C.J., with whom, ZARELLA, J., joins, concurring.
I agree with, and join in, the majority opinion's conclusions that the plaintiff, the Connecticut Insurance Guaranty Association, is not estopped from contesting its statutory obligation to satisfy the claims at issue due to the preinsolvency misconduct by Medical Inter–Insurance Exchange, the insurer of the defendant Associated Women's Health Specialists, P.C., and, further, that the relevant exclusion clause plainly and unambiguously precludes coverage for those claims. I write separately only to emphasize that, in the event that an insurance policy term is deemed to be ambiguous, the parties are entitled to present extrinsic evidence regarding the mutual intent of the insured and the insurer as to the scope of coverage, and the trial court must consider that evidence before applying the rule of contra proferentem to resolve the ambiguity in favor of the insured. In other words, the rule should be applied as a tie breaker only when all other avenues to determining the parties' intent have been exhausted. See Cruz v. Visual Perceptions, LLC, 311 Conn. 93, 107–108, 84 A.3d 828 (2014) ; see, e.g., Lexington Ins. Co. v. Lexington Healthcare Group, Inc., 311 Conn. 29, 59 n. 20, 84 A.3d 1167 (2014) ; Connecticut Ins. Guaranty Assn. v. Fontaine, 278 Conn. 779, 788–89, 900 A.2d 18 (2006) ; Metropolitan Life Ins. Co. v. Aetna Casualty & Surety Co., 255 Conn. 295, 306, 765 A.2d 891 (2001) ; see also 1 B. Ostrager & T. Newman, Handbook on Insurance Coverage Disputes (16th Ed. 2013) § 1.01[b] and [c], pp. 14–18; 1 B. Ostrager & T. Newman, supra, § 1.05, at pp. 55–56 ; 2 S. Plitt et al., Couch on Insurance Law (3d Ed. Rev. 2010) § 22:16, pp. 22–93 through 22–94; but see 1 New Appleman on Insurance Law, Library Edition, (J. Thomas & F. Mootz eds., 2011) § 5:02, pp. 5–7.
I recognize that the present case was decided on the parties' cross motions for summary judgment, and that the plaintiff, both before the trial court and on appeal, argued that the policy provision at issue was unambiguous such that resort to extrinsic evidence was unnecessary. The defendants, Susan Drown and Rodney Drown, individually and on behalf of their minor son, Joshua Drown, and Associated Women's Health Specialists, P.C., however, appended more than twenty exhibits to their summary judgment motion, and the court, after finding an ambiguity, did not discuss or analyze those exhibits before finding in favor of the defendants on the basis of contra proferentem. It therefore is unclear whether the court relied on the evidence sub silentio, disregarded it as unhelpful or otherwise incompetent, or believed that evaluating it simply was unnecessary.
In light of this conclusion, I do not need to determine whether the association is liable because of the breach by Medical Inter–Insurance Exchange, the insolvent insurer, of its duty to defend under the policy at issue.
McDONALD, J., with whom EVELEIGH, J., joins, dissenting.
I disagree with the majority that the corporate coverage under the professional liability insurance policy issued to the defendant Associated Women's Health Specialists, P.C. (Health Specialists), unambiguously excludes medical malpractice claims seeking to hold that professional corporation vicariously liable solely on the basis of the negligence of one of its physicians, France Bourget. I would conclude that the policy is ambiguous as to this issue, and that, in accordance with the reasonable expectation of the insured, the policy should be construed in favor of coverage. Accordingly, I would conclude that the Appellate Court improperly reversed the trial court's judgment in favor of the defendants, Susan Drown and Rodney Drown, individually and on behalf of their minor son, Joshua Drown, and Health Specialists, and remanded the case with direction to render judgment in favor of the plaintiff, Connecticut Insurance Guaranty Association (association).1 See Connecticut Ins. Guaranty Assn. v. Drown, 134 Conn.App. 140, 159, 37 A.3d 820 (2012). Therefore, I respectfully dissent.
As the majority acknowledges, “[u]nder our law, the terms of an insurance policy are to be construed according to the general rules of contract construction.... The determinative question is the intent of the parties, that is, what coverage the ... [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy.... If the terms of the policy are clear and unambiguous, then the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning.... However, [w]hen the words of an insurance contract are, without violence, susceptible of two [equally reasonable] interpretations, that which will sustain the claim and cover the loss must, in preference, be adopted.... [T]his rule of construction favorable to the insured extends to exclusion clauses.” (Internal quotation marks omitted.) Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., 290 Conn. 767, 795–96, 967 A.2d 1 (2009).
Moreover, “[o]ur analysis of the language of the insurance contract is governed by the well established principle of insurance law that policy language will be construed as laymen would understand it and not according to the interpretation of sophisticated underwriters.... Thus, we must decide whether, reading the policy from the perspective of a reasonable layperson in the position of the purchaser of the policy, the policy is ambiguous. Ceci v. National Indemnity Co., 225 Conn. 165, 168, 622 A.2d 545 (1993).” (Citations omitted; emphasis added; internal quotation marks omitted.) Israel v. State Farm Mutual Automobile Ins. Co., 259 Conn. 503, 508–509, 789 A.2d 974 (2002) ; accord Berry v. Federal Kemper Life Assurance Co., 136 N.M. 454, 471, 99 P.3d 1166 (App.2004) (“The concept of reasonableness has a somewhat specialized meaning in the insurance context.... When evaluating competing interpretations of a policy, the courts should view the language issue from the standpoint of a hypothetical reasonable insured.... Thus, the question the court should ask itself initially is what understanding a reasonably intelligent, non-lawyer lay person might glean from the policy, in light of the usual meaning of the words and the circumstances leading to purchase of the policy.... Specialized knowledge of the insurance industry case law, academic treatments, and industry norms or standards should not enter into the inquiry.” [Citations omitted; internal quotation marks omitted.] ), cert. denied, 136 N.M. 515, 100 P.3d 672 (2004), cert. denied, 544 U.S. 920, 125 S.Ct. 1640, 161 L.Ed.2d 477 (2005).
With these principles in mind, I turn to the pertinent provisions of the professional liability insurance policy issued to Health Specialists by its now insolvent insurer, Medical Inter–Insurance Exchange (Exchange). The declarations page of the policy, entitled “PHYSICIANS AND SURGEONS PROFESSIONAL LIABILITY CLAIMS MADE INSURANCE,” reflects that Exchange made available three types of coverage under such policies: “A. Individual Professional Liability” (coverage A or individual coverage); “B. Corporate/Partnership Liability” (coverage B or corporate coverage); and “C. Paramedical Employee Liability” (coverage C or paramedical coverage). The declarations page provides that insurance is afforded only for the coverage parts “for which a premium charge or ‘No Charge’ is indicated.” Although there is no such indication for any of the coverage parts, there is a policy limit set forth for coverage B only—$2 million for each medical incident and $5 million aggregate. It is undisputed that the policy affords coverage B/corporate coverage, and no other coverage, to the named insured, Health Specialists.
As the Appellate Court previously explained in connection with an Exchange policy, “ ‘claims-made’ ” simply means “that coverage under the policy depended on the date that the insured reported the claim to the [insurer].” Mitchell v. Medical Inter–Insurance Exchange, 101 Conn.App. 721, 723, 923 A.2d 790, cert. denied, 284 Conn. 903, 931 A.2d 265 (2007).
The policy does not define paramedical employees. Webster's Third New International Dictionary (2002) defines paramedical as “concerned with supplementing the work of medical personnel: having a secondary relation to medicine....” See also American Heritage Dictionary (3d Ed. 1992) (“[o]f, relating to, or being a person trained to give emergency medical treatment or assist medical professionals”); Stedman's Medical Dictionary (28th Ed. 2006) p. 1420 (“[r]elated to the medical profession in an adjunctive capacity, e.g., denoting allied health fields such as physical therapy or speech pathology” or “[r]elating to a paramedic”).
Section I of the policy, “COVERAGE AGREEMENTS,” provides in relevant part with respect to coverage B: “[Exchange] will pay on behalf of [Health Specialists] all sums that [Health Specialists] shall become legally obligated to pay as damages because of ... [i]njury arising out of the rendering of or failure to render ... professional services by any person for whose acts or omissions ... [Health Specialists] is legally responsible.” (Footnote added.) It is undisputed that, barring the application of an exclusion or limitation, vicarious liability for the negligence of a physician employed by a corporation would fall within the scope of corporate coverage.
“ ‘Professional services' ” are defined in relevant part under § VI of the policy as “services requiring specialized knowledge and mental skill in the practice of the profession described in the declarations page....” There are, however, no professions described in the only declarations page in the record, except to the extent that the page is entitled “PHYSICIANS AND SURGEONS PROFESSIONAL LIABILITY CLAIMS MADE INSURANCE” and a notation setting forth “FORMS AND ENDORSEMENTS (attached to this policy at inception)” lists a form for “Physicians and Surgeons Professional Liability Insurance Claims Made Policy.”
Section II sets forth policy exclusions. Exclusion (i) of that section provides in relevant part: “This insurance does not apply to liability of [Health Specialists] ... (i) corporation/partnership under Coverage Agreement B with respect to injury arising solely out of acts or omissions in the rendering or failure to render professional services by individual physicians or nurse anesthetists, or by any paramedical for whom a premium charge is shown on the declarations page. ” (Emphasis added.)
The majority has effectively adopted the Appellate Court's opinion in concluding that a claim of vicarious liability predicated solely on the negligence of a physician acting for the professional corporation is unambiguously excluded from coverage under exclusion (i). This interpretation is based solely on technical rules of grammar and a rule of construction of questionable application to the present case. In particular, in concluding that the phrase “for whom a premium charge is shown on the declarations page” modifies only the last category of employees—paramedicals—the majority focuses on: (1) the comma and phrase “or by” preceding “any paramedical for whom a premium charge is shown on the declarations page”; and (2) the last antecedent rule of construction. For the reasons that follow, I am not persuaded that application of these technical rules yields the only reasonable interpretation of the policy at issue.
Rules of grammar are simply one tool of construction, and many jurisdictions recognize that such rules cannot supersede a reasonable, contextual reading of an insurance contract. See, e.g., Senn's Administratrix v. Michigan Mutual Liability Co., 267 S.W.2d 526, 527 (Ky.App.1954) (“[i]n the construction of all contracts the endeavor of the courts is to give the contract under investigation such a construction as will comport with the reasonable intent of the parties in making the contract, although this construction may not conform to strict rules of grammar or punctuation” [internal quotation marks omitted] ); Philadelphia Indemnity Ins. Co. v. Maryland Yacht Club, Inc., 129 Md.App. 455, 479, 742 A.2d 79 (1999) (“[A]lthough the court, in construing a contract, will not ignore the rules of grammar and the grammatical construction of the language used, the grammatical construction will not be followed if a different construction will better give effect to the intention of the parties as shown by the whole instrument and the circumstances.... Grammar is one helpful tool, among many, for discerning the meaning of words.” [Citations omitted; internal quotation marks omitted.] ); Jarrard v. Continental Casualty Co., 250 Or. 119, 124, 440 P.2d 858 (1968) (“[t]he rules of grammar ... are technical and, as in the case of statutes, will not be permitted to control construction of a contract when to do so would be to render the language meaningless or absurd”); cf. Tuohey v. Martinjak, 119 Conn. 500, 503, 177 A. 721 (1935) (“[i]n construing statutes the insertion or omission of commas will often be overlooked if thereby the fair purpose and intent of the law would be effected”).
Moreover, the last antecedent rule of construction only has been applied by this court thus far in the construction of statutes, and even then “only to the extent that no contrary intention appears and the construction does not otherwise impair the meaning of the sentence.” (Internal quotation marks omitted.) Republican Party of Connecticut v. Merrill, 307 Conn. 470, 491, 55 A.3d 251 (2012). This court has not had occasion to consider whether this rule should be applied to contracts generally or insurance contracts specifically. But see Goodwin v. Woodbridge Country Club, Inc., 170 Conn. 191, 198, 365 A.2d 1158 (1976) (rejecting party's construction of contract based on application of rule, noting that application of rule would result in construction that was strained and contrary to natural and ordinary meaning of words and phrases used). Although many other jurisdictions have recognized the rule's application in construing contracts generally, some jurisdictions have questioned its utility in ascertaining the intent of the parties to the contract, while others that have applied the rule generally limit its application through other rules of construction. In addition to the concerns articulated by these jurisdictions, there also is reason to question the rule's application to insurance contracts specifically, where we are required to view the policy's meaning from the perspective of the reasonable layperson in the position of the purchaser of the policy. See Ceci v. National Indemnity Co., supra, 225 Conn. at 168, 622 A.2d 545. Nonetheless, even if I were to assume that this rule applies in the construction of insurance contracts, for the reasons that follow, it would at best lend support to one plausible construction, not be outcome determinative.
The Appellate Court explained: “The last antecedent rule provides that qualifying phrases, absent a contrary intention, refer solely to the last antecedent in a sentence.” Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 151, 37 A.3d 820. The majority has applied this rule in concluding that the phrase “for whom a premium charge is shown on the declarations page” applied only to the antecedent immediately preceding it—“any paramedical”—and not to the more remote antecedents—“individual physicians or nurse anesthetists....”
As a general matter, jurisdictions have applied this rule only when it yields a construction that is consistent with a broader, contextual reading of the contract. See, e.g., People ex rel. Lockyer v. R.J. Reynolds Tobacco Co., 107 Cal.App.4th 516, 530, 132 Cal.Rptr.2d 151 (2003) (“the last antecedent rule is not immutable and should not be rigidly applied in all cases” [internal quotation marks omitted] ); Chandler–McPhail v. Duffey, 194 P.3d 434, 441 (Colo.App.2008) (“[W]e discern no reason why the last antecedent rule should not be applied as a grammatical presumption in determining the intent of the contracting parties.... As a presumption, the rule is not inflexible and yields to any apparent contrary intention of the drafting parties.” [Citations omitted; internal quotation marks omitted.] ); Gullett v. Van Dyke Construction Co., 327 Mont. 30, 36, 111 P.3d 220 (2005) (“[i]n interpreting contracts, this [c]ourt has followed a basic rule of grammatical construction that, absent the manifestation of a contrary intention, qualifying words and phrases should be applied only to the words or phrases immediately preceding, or in other words, the last antecedent” [internal quotation marks omitted] ); Wohl v. Swinney, 118 Ohio St.3d 277, 279, 888 N.E.2d 1062 (2008) (“[I]f there is contrary evidence that demonstrates that a qualifying phrase was intended to apply to more than the term immediately preceding it, we will not apply the last-antecedent rule so as to contravene that intent. Before applying the last-antecedent rule, we must therefore examine the contract as a whole to determine whether any contrary intent appears.”).
Some jurisdictions have questioned the rule's utility in ascertaining intent. See, e.g., Stanbalt Realty Co. v. Commercial Credit Corp., 42 Md.App. 538, 539, 401 A.2d 1043 (1979) (“[t]his [last antecedent] rule of construction, never adopted in Maryland, and of only marginal significance in the scattered jurisdictions that have called upon it, is too frail a reed to carry the appellant's burden”); id. at 542, 401 A.2d 1043 (“[t]he great professors of contracts, [Samuel] Williston and [Arthur] Corbin, in their respective multi-volume works do not even recognize the existence of any ‘last antecedent rule’ ”); see also Phoenix Control Systems, Inc. v. Ins. Co. of North America, 165 Ariz. 31, 38, 796 P.2d 463 (1990) (Feldman, J., concurring) (“I see no benefit and much harm in using the doctrine of the last antecedent in construing contracts. Reliance on such arcane, judicially adopted grammatical rules does not help us reach the intentions of the parties. Surely, even if the parties had bargained for the boilerplate language in this policy—something the record does not establish at all—it would be a fiction to pretend they drafted the language mindful that its meaning would be ascertained through use of the doctrine of the last antecedent.”).
Related to this concern, at least one jurisdiction has concluded that the rule cannot be used unless the court first concludes that the contract otherwise is ambiguous. See, e.g., Miller v. Kase, 789 So.2d 1095, 1098 (Fla.App.2001). Another jurisdiction suggested that its application cannot be used to yield an inequitable result to which a reasonable party would not have agreed. See, e.g., Business Development Services, Inc. v. Field Container Corp., 96 Ill.App.3d 834, 839, 52 Ill.Dec. 405, 422 N.E.2d 86 (1981) (declining to apply last antecedent rule when application contravened rule that “where a contract is susceptible of two constructions, one of which makes it fair, customary and such as prudent men would naturally execute, while the other makes it inequitable, unusual, or such as reasonable men would not likely enter into, the interpretation which makes a rational and probable agreement must be preferred” [internal quotation marks omitted] ).
Because we are required to consider the policy from the perspective of the reasonable insured layperson, I cannot help but note at the outset that the majority's interpretation seems counterintuitive in its real world application. Neither the majority, nor the Appellate Court, nor the association has offered a reasonable explanation as to why Health Specialists, or any other obstetrical practice for that matter, would purchase a corporate liability policy that would exclude from coverage the most obvious source of its potential liability, the negligence of its physicians, under most circumstances. Indeed, the title of the policy, “PHYSICIANS' & SURGEONS' PROFESSIONAL LIABILITY INSURANCE CLAIMS—MADE,” read together with the broad grant of insurance coverage for any “[i]njury arising out of the rendering of ... professional services by any person for whose acts or omissions the corporation/partnership [Health Services] is legally responsible,” would seem to suggest that coverage for such persons is precisely the policy's main purpose. Nor has a logical explanation been advanced as to why an insurer would provide no corporate coverage if a physician “solely” was at fault for the injuries, but would provide full coverage if the physician was 99 percent at fault for the injuries at issue and a person to whom the exclusion does not apply was 1 percent at fault because such injury was not caused solely by the physician's acts. Such a construction would surely encourage a professional corporation to require that a nonscheduled paramedical be involved in every interaction between a physician and a patient to facilitate a claim of shared negligence and thereby negate the exclusion.
Before the trial court, the association conceded that the policy would provide “very limited” coverage for a professional corporation on the basis of its physicians' conduct.
Despite these real world implications, as this court previously noted when the association's construction of this identical policy exclusion in another case yielded a different counterintuitive result, “we would be bound to apply [the exclusion] if the policy terms unambiguously and inexorably led to the conclusion that the parties manifested such an intention. See Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., [supra, 290 Conn. at 796, 967 A.2d 1 ] ([t]he court must conclude that the language should be construed in favor of the insured unless it has a high degree of certainty that the policy language clearly and unambiguously excludes the claim).” (Internal quotation marks omitted.) Johnson v. Connecticut Ins. Guaranty Assn., 302 Conn. 639, 648, 31 A.3d 1004 (2011). I cannot say with a high degree of certainty that the policy excludes the Drowns' claims.
Turning back to the text of the policy, exclusion (i) provides that corporate coverage will not apply with respect to injuries “solely” resulting from “professional services by individual physicians or nurse anesthetists, or by any paramedical for whom a premium charge is shown on the declarations page.” Thus, the exclusion refers to three categories of professionals: physicians, nurse anesthetists, and paramedicals. More particularly, exclusion (i) refers to “individual physicians or nurse anesthetists” and “any paramedical....” (Emphasis added.) Accordingly, the comma and the phrase “or by” preceding “any paramedical” simply could be intended to make clear that “individual” modifies both physicians and nurse anesthetists. Cf. State v. Roque, 190 Conn. 143, 152, 460 A.2d 26 (1983) (noting that “while punctuation is a recognized aid to statutory construction, it is not conclusive,” and that “the disjunctive ‘or’ has often been construed as ‘and’ ”).
In their briefs to this court, the defendants have not argued that the word “solely” renders exclusion (i) ambiguous. In their rebuttal to the association's oral argument before this court, however, they highlighted the fact that the association's construction of that term at oral argument was inconsistent with the one that it previously had advanced. Specifically, in its brief to this court and in the proceedings before the trial court, the association indicated that exclusion (i) would not apply if an injury arose partially out of the acts or omissions of a nurse employed by a hospital or another medical practice having a different insurer. By contrast, at oral argument before this court, it indicated that, in order for the exclusion not to bar coverage, the injury must arise partially out of the acts or omissions of a Health Specialists' employee to whom the exclusion does not apply. The defendants recognize that this inconsistency, which does not directly bear on the case before us, would not entitle them to judgment in their favor. See Connecticut Medical Ins. Co. v. Kulikowski, 286 Conn. 1, 15, 942 A.2d 334 (2008) (“A party claiming that an insurance policy is ambiguous as to a particular issue ... must do more than establish that the policy has some ambiguous language.... There must be a nexus between the ambiguity and the disputed issue.... The ambiguous language must render the policy ambiguous as to the relevant issue.” [Emphasis omitted.] ). Nonetheless, the defendants suggested at oral argument that, if we conclude that the applicable language is not ambiguous, we could remand the case to allow them to prove that someone who was not covered by the exclusion was partially negligent, together with Bourget. It is well settled that a party may not advance one theory before the trial court and a different one on appeal. Afkari–Ahmadi v. Fotovat–Ahmadi, 294 Conn. 384, 395, 985 A.2d 319 (2009). Moreover, the fact that the association cannot settle on the scope of the exclusion seems to lend force to the conclusion that the exclusion is ambiguous. Nonetheless, I do not believe that it would be appropriate to remand the case for such evidentiary proceedings when the complaint contained no allegations of negligence as to another employee, except those withdrawn against another Health Specialists' physician.
Thus, although I agree with the association that the use of “any” before paramedical indicates an intention to treat this category differently than physicians or nurse anesthetists, I disagree that the defendants' construction would effectively rewrite the policy to exclude coverage for “ ‘any individual physicians, nurse anesthetists, or paramedicals for whom a premium charge is shown on the declarations page.’ ”
Indeed, the construction advanced by the majority appears to render the term “individual” superfluous. As the Appellate Court noted, the plural form of the word physician is broad enough to encompass one or more than one physician. Connecticut Ins. Guaranty Assn. v. Drown, supra, 134 Conn.App. at 153, 37 A.3d 820. “We previously have recognized the canon of construction of insurance policies that a policy should not be interpreted so as to render any part of it superfluous.... Since it must be assumed that each word contained in an insurance policy is intended to serve a purpose, every term will be given effect if that can be done by any reasonable construction....” (Internal quotation marks omitted.) R.T. Vanderbilt Co. v. Continental Casualty Co., 273 Conn. 448, 468, 870 A.2d 1048 (2005). Thus, under this rule, the defendants' interpretation would be preferred.
It also is important to view exclusion (i) in context with the policy as a whole. I note that § III of the policy, which sets forth “PERSONS INSURED,” provides that each of the following is an insured: “[U]nder Coverage A, any individual named in the declarations page as insured” and “under Coverage C [paramedical liability], any employee of an insured under Coverage A or Coverage B for whom a premium charge is shown in the declarations page.” (Emphasis added.) Thus, an insured under coverage A is an “individual named in the declarations page,” just as exclusion (i) refers to “individual physicians or nurse anesthetists....” (Emphasis added.) Paramedicals, by contrast, need not be individually named to be insured under coverage C. Moreover, although the majority reasonably points out that the phrase “for whom a premium charge is shown on the declarations page” is used only in relation to paramedical coverage in § III, when that phrase is used in exclusion (i), it is broad enough to encompass both named individuals (coverage A), for whom there presumably would be a corresponding premium, and paramedicals (coverage C), for whom a premium would be shown even if they are not named individually.
The significance of this common terminology is supported by § VIII(g) of the policy, discussed later in this opinion, which refers to “physician or nurse anesthetist employees of an individual, partnership or corporation insured....” (Emphasis added.) Thus, a physician or nurse anesthetist may be covered as an insured if individually named or may be covered as an employee of an insured if not so named.
The distinction in § III(a) and (d) between “individual named” in coverage A and “any employee” in coverage C would seem to indicate that paramedicals need not be named as individuals, but, rather, simply need to establish their status as an employee of an insured in such a capacity. This inference is supported by other cases indicating that paramedicals have been treated under professional liability policies as a broad undifferentiated class or as a subset of that class. Compare Johnson v. Connecticut Ins. Guaranty Assn., supra, 302 Conn. at 646, 31 A.3d 1004 (association argued that “the exclusion applies to paramedical employees as a class, as long as there is a premium shown for that class on the declarations page”), with Connecticut Medical Ins. Co. v. Kulikowski, 286 Conn. 1, 4, 942 A.2d 334 (2008) (declarations page referenced by job title two nurse practitioners employed by physician under paramedical employee coverage). Perhaps lower risks of liability and greater turnover for such professionals weighs in favor of not identifying such persons individually by name, as is necessary for physicians and nurse anesthetists, who are required by law to carry a certain limit of professional liability insurance. See General Statutes §§ 20–11b and 20–94c.
I also note that exclusion (i) is the last of nine enumerated exclusions. Each of the preceding eight exclusions addresses relatively narrow categories of acts or related remedies, many of which appear fairly standard, such that an insured would not expect coverage for such acts. For example, in § II(b) of the policy coverage is excluded for injuries arising from a criminal act, and in § II(d) coverage is excluded for an act unauthorized in accordance with licensing requirements or restrictions. The narrower reading of exclusion (i) advanced by the defendants renders the scope of that provision more consistent with the narrow scope of the exclusions that precede it, whereas the association's expansive construction makes exclusion (i) practically swallow the rule of coverage prominently provided at the outset of the policy.
Finally, I note that Health Specialists' vicarious liability under coverage B for injuries caused by the negligence of physicians or nurse anesthetists already is limited by § VIII(g) of the policy. Section VIII of the policy sets forth conditions of insurance. Section VIII(g) provides in relevant part that coverage “shall not apply to any individual, partnership or corporation insured with respect to claims arising out of the acts or omissions of ... physician or nurse anesthetist employees of an individual, partnership or corporation insured ... unless such persons have individual coverage for such claims at the time they are made under a physicians' and surgeons' or similar professional liability insurance policy with limits of liability equal to or greater than the limits of liability of the insured under this policy. ” (Emphasis added.) Physicians and nurse anesthetists are required by statute in this state, and apparently most states, to carry malpractice insurance in a prescribed amount. See General Statutes §§ 20–11b and 20–94c ; see also Butler v. Flint Goodrich Hospital of Dillard University, 607 So.2d 517, 521 (La.1992), cert. denied sub nom. Butler v. Medley, 508 U.S. 909, 113 S.Ct. 2338, 124 L.Ed.2d 249 (1993). Such individual insurance would be a primary, and equal or greater, source of recovery for any judgment rendered solely due to the negligence of such professionals.
Bourget had individual coverage with another insurer in an amount equal to Health Specialists' coverage, thus satisfying the condition in § VIII(g).
Therefore, I would conclude that the defendants have advanced a construction of the policy supporting coverage that is at least equally reasonable to the one advanced by the association, especially when the text of the policy is viewed in the light of Health Specialists' purpose in obtaining the policy. Moreover, because the parties both have advanced reasonable constructions, I believe we properly may consider undisputed extrinsic evidence; Hartford Accident & Indemnity Co. v. Ace American Reinsurance Co., 284 Conn. 744, 762–63, 936 A.2d 224 (2007) ; namely, the six year period during which Exchange offered a defense to Health Specialists without reserving its rights under exclusion (i). Accordingly, the policy should be construed in favor of coverage.
I note that, although the defendants have repeatedly cited throughout the course of these proceedings the fact that Exchange never asserted a reservation of rights, the association has never contended at any stage of these proceedings that there is any countervailing extrinsic evidence that would support the conclusion that the parties understood the policy to exclude claims like the one advanced in the present case. Most significantly, the association never claimed in its appeal to the Appellate Court that, even if the trial court properly determined that exclusion (i) of the policy was ambiguous, it improperly rendered summary judgment without permitting it to proffer extrinsic evidence of the parties' intent before applying the rule of contra proferentem. Therefore, I see no justification for remanding the case to the trial court for an evidentiary hearing, as the concurring justices seem to suggest is required.
--------
I respectfully dissent.