Opinion
No. X07-CV-06-4023116
April 13, 2009
MEMORANDUM OF DECISION
On February 26, 2003, Leslie Andino, a patient at the Greenwood Health Center (Greenwood) in Hartford, allegedly started a fire with a cigarette lighter resulting in the tragic deaths of sixteen patients and in serious injury to others. It is undisputed that the defendant, Nationwide Health Properties (Nationwide), owned the property and leased it to a codefendant, Lexington Healthcare Group, Inc., (LHCG); another codefendant, Lexington Highgreen Holding, Inc. (Highgreen), was the operator of Greenwood. Pursuant to LHCG's lease agreement with Nationwide, LHCG procured general liability and professional liability insurance from the plaintiff, Lexington Insurance Company (Lexington). The administrators or conservators on behalf of some of the victims of the fire (underlying plaintiffs) commenced several lawsuits alleging negligence resulting in wrongful death or serious bodily injuries against Nationwide, LHCG and Highgreen. In these underlying cases, Nationwide filed cross claims against LHCG and Highgreen claiming both common-law and contractual indemnity and breach of contract for failure to procure the proper insurance pursuant to the lease.
LHCG and Highgreen have not filed appearances in the present case. According to Lexington, LHCG and Highgreen filed bankruptcy petitions on April 2, 2003, but the victims of the fire were given permission to file litigation to obtain the proceeds of the insurance policy.
Twelve cases are still pending in complex litigation: Boynton v. Lexington Highgreen Holding, Inc., Docket No. X07 CV 04 4025122; Castro v. Lexington Highgreen Holding, Inc., Docket No. X07 CV 04 4025144; Elias v. Lexington Highgreen Holding, Inc., Docket No. X07 CV 04 4025136; Kholod v. Nationwide Health Properties, Inc., Docket No. X07 CV 04 4025162; Lopez v. Nationwide Health Properties, Inc., Docket No. X07 CV 05 4025132; Malec v. Lexington Healthcare Group, Inc., Docket No. X07 CV 05 4025150; Morin v. Lexington Highgreen Holding, Inc., Docket No. X07 CV 05 4025118; Pereira v. Lexington Highgreen Holding, Inc., Docket No. X07 CV 04 4025143; Piehl v. Lexington Higgreen Holding, Inc., Docket No. X07 CV 05 5005804; Jose Rodriguez v. Lexington Healthcare Group, Inc., Docket No. X07 CV 05 4025134; William Rodriguez v. Lexington Highgreen Holding, Inc., Docket No. X07 CV 04 4025164; Timmons v. Nationwide Health Properties, Inc., Docket No. X07 CV 05 4025151. Two underlying plaintiffs are involved in Kholod v. Nationwide Health Properties, Inc., Docket No. X07 CV 04 4025162. Therefore, there are a total of thirteen underlying plaintiffs.
Lexington commenced this action for a declaratory judgment to resolve certain questions pertaining to the amount of coverage available. The underlying plaintiffs and Nationwide filed counterclaims against Lexington. On June 6, 2008, Lexington filed summary judgment motions against the underlying plaintiffs and Nationwide. Memoranda in opposition as well as cross motions for summary judgment were filed by Nationwide and the underlying plaintiffs on August 12, 2008. Several replies were subsequently filed and the court heard oral argument on December 15, 2008.
In the fourth count of Nationwide's counterclaim, filed October 16, 2006, Nationwide alleged that the general liability and professional liability policies cover its indemnity cross claims in the underlying actions. In a memorandum of decision, dated June 8, 2007, this court granted Lexington's motion to dismiss this claim based on lack of subject matter jurisdiction as it was premature because Nationwide had not obtained judgment on its cross claims in the underlying plaintiffs' cases. In Nationwide's motion for summary judgment, the fourth count of Nationwide's counterclaim is restated as an argument. Because the court has granted the motion to dismiss this count of Nationwide's counterclaim and because judgment has still not been obtained in the underlying plaintiffs' cases, the court does not further address Nationwide's argument in this memorandum of decision notwithstanding the parties' attempts to reintroduce the issues. "[T]he parties cannot confer subject matter jurisdiction on the court, either by waiver or by consent." (Internal quotation marks omitted.) Webster Bank v. Zak, 259 Conn. 766, 774, 792 A.2d 66 (2002).
Five of the underlying plaintiffs, Jose Rodriguez, Boynton, Morin, Elias and Pereira, filed a joint memorandum in opposition to Lexington's motion for summary judgment and in support of their motion for summary judgment on August 12, 2008. The remaining underlying plaintiffs, except Timmons, adopted this memorandum in August and September of 2008.
I A.
In Lexington's motions for summary judgment, it argues that the only coverage available to the underlying plaintiffs is under the professional liability policy and that there was only one medical incident. As such, Lexington asserts that the maximum coverage available is $500,000, which is reduced by the self-insured retention of $250,000. Therefore, Lexington argues that there is only a total of $250,000 of coverage available under the policy for the underlying plaintiffs' claims and Nationwide's cross claims. In the alternative, Lexington maintains that, if this court finds that there are multiple medical incidents, the maximum aggregate coverage under the policy is $1 million, subject to the self-insured retention per medical incident. Finally, Lexington argues that it is not obligated to pay any self-insured retentions or punitive damages and that it has no duty to defend once the amounts under the policy are distributed.
In response, the underlying plaintiffs and Nationwide argue that each claim of the underlying actions constitutes separate, unrelated medical incidents; that Lexington is responsible for any self-insured retentions because they were not paid by the bankrupt LHCG; and that the total aggregate coverage available under the policy is $10 million. In the alternative, they argue that the total aggregate coverage is $1 million. Finally, Nationwide and the underlying plaintiffs argue that, to the extent any provision is ambiguous, it must be construed against Lexington under Connecticut law. These arguments will be discussed in turn.
B.
The relevant portions of the claims-made, comprehensive policy covering the period of September 6, 2002 to December 5, 2003 are as follows:
The original policy period was from September 6, 2002 to September 6, 2003. According to Lexington, this period was extended to December 5, 2003.
HEALTHCARE PROFESSIONAL LIABILITY-CLAIMS MADE AND HEALTHCARE GENERAL LIABILITY CLAIMS MADE FOR LONG TERM CARE FACILITIES DECLARATIONS
Item 1. (a) FIRST NAMED INSURED: Lexington Healthcare Group, Inc.
(b) OTHER NAMED INSURED(S):
Item 5. LIMITS OF INSURANCE
(a) Healthcare Professional Liability
CT Page 6501
Aggregate Limit $1,000,000
Each Medical Incident $500,000
Deductible SEE ENDORSEMENT #5
Deductible Aggregate SEE ENDORSEMENT #5
(b) Healthcare General Liability
Aggregate Limit $1,000,000
Products/Completed Operations
Aggregate Limit NOT APPLICABLE
Each Occurrence Limit $500,000
Personal/Advertising Injury
Limit $500,000
Fire Damage Limit NOT APPLICABLE-Each Fire
Medical Expense Limit NOT APPLICABLE-Each
Injured Person
Deductible SEE ENDORSEMENT #5
Deductible Aggregate SEE ENDORSEMENT #5
Item 6. PREMIUM: $716,852HEALTHCARE PROFESSIONAL LIABILITY AND HEALTHCARE GENERAL LIABILITY FOR LONG TERM CARE FACILITIES GENERAL POLICY PROVISIONS AND CONDITIONS I. DEFINITIONS APPLICABLE TO ALL COVERAGE PARTS
D. Bodily Injury means physical injury, sickness or disease sustained by any person, including death resulting from any of these at any time. Bodily injury does not include emotional distress or mental anguish unless due to physical injury, sickness or disease.
M. Medical Incident means any act, error or omission in the providing of or failure to provide professional services.
O. Occurrence means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
P. Patient means a person seeking or receiving, either on an inpatient, outpatient or emergency basis, any form of medical, surgical, dental or nursing care or any service or treatment.
U. Professional Services means:
1. Medical, surgical, dental, nursing or other health care services including but not limited to the furnishing of food or beverages in connection with such services; the practice of nuclear medicine; the furnishing or dispensing of drugs or medical, dental or surgical supplies or appliances; or the handling or treatment of deceased human bodies, including, but not limited to, autopsies, organ donation or other procedures;
2. Services by any person as a member of a formal accreditation, standards review or similar professional board or committee of any Insured; or
3. Supervising, teaching, proctoring others at your request.
HEALTHCARE GENERAL LIABILITY CLAIMS MADE COVERAGE PART FOR LONG TERM CARE FACILITIES I. INSURING AGREEMENTS
A. Bodily Injury and Property Damage
We will pay those sums that an Insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this Coverage Part applies.
This Coverage Part applies to bodily injury and property damage only if:
1. The bodily injury or property damage is caused by an occurrence that takes place in the coverage territory; and
2. The bodily injury or property damage occurs after the retroactive date but before the end of the policy period.
3. A claim for damages because of the bodily injury or property damage is first made against an Insured during the policy period or the extended reporting period, if applicable.
III. EXCLUSIONS
A. With respect to Insuring Agreements A. Bodily Injury and Property Damage, B. Personal and Advertising Injury, and C. Medical Expenses of this Coverage Part, we will not defend or pay claims for:
14. Other Coverage Parts
Any claims brought under any other Coverage Part of this Policy other than this Healthcare General Liability Claims Made Coverage Part, unless otherwise stated.
15. Penalties
Any fines, penalties, punitive, exemplary or multiplied damages.
16. Patients or Residents
Any bodily injury or property damage sustained by your patients or residents.
HEALTHCARE PROFESSIONAL LIABILITY CLAIMS MADE COVERAGE PART FOR LONG TERM CARE FACILITIES III. EXCLUSIONS
A. We will not defend or pay claims for . . .
CT Page 6504
2. Contractual Liability
Any liability you assume under any contract or agreement. This exclusion does not apply to:
a. Liability that you would have in the absence of a contract or agreement;
b. Liability you assume in a written contract with:
1. A Health Maintenance Organization;
2. A Preferred Provider Organization;
3. An Independent Practice Association; or
4. Any other similar organization; but only for such liability as is attributable to an Insured's alleged negligence arising out of professional services.
IV. LIMITS OF INSURANCE
A. The Limits of Insurance shown in the Declarations for Healthcare Professional Liability for Long Term Care Facilities and the rules below fix the most we will pay regardless of the number of
1. Insureds;
2. Claims made or suits brought;
3. Persons or organizations making claims or bringing suits.
B. The Aggregate Limit is the most we will for the sum of all damages under this Coverage Part.
C. Subject to paragraph B. above, the Each Medical Incident Limit stated in the Declarations, is the most we will pay under this Coverage Part for damages arising out of a single medical incident.
D. All claims arising from continuous, related, or repeated medical incidents shall be treated as arising out of one medical incident. Only the Policy in effect when the first such claim is made shall apply to all such claims.
ENDORSEMENT #3 AGGREGATE LIMITS ENDORSEMENT GL/PL
The Policy is amended as follows:
AGGREGATE POLICY LIMIT
The Aggregate Policy Limit stated below is the most we will pay for any annual period for the sum of all damages payable under the HEALTHCARE PROFESSIONAL LIABILITY COVERAGE PART FOR LONG TERM CARE FACILITIES and the HEALTHCARE GENERAL LIABILITY COVERAGE PART FOR LONG TERM CARE FACILITIES.
AGGREGATE POLICY LIMIT: $10,000,000
II. AGGREGATE LIMITS PER LOCATION
Subject to the Aggregate Policy Limit stated in Item I. above:
A. HEALTHCARE PROFESSIONAL LIABILITY COVERAGE PART FOR LONG TERM CARE FACILITIES, Section IV. Limits of Insurance, Item B. is deleted in its entirety and replaced with the following:
The Aggregate Limit is the most we will pay for the sum of all damages under this Coverage Part. The Aggregate Limit shall apply separately to each location owned or rented by you.
B. HEALTHCARE GENERAL LIABILITY COVERAGE PART FOR LONG TERM CARE FACILITIES, Section IV. Limits of Insurance, Item B. is deleted in its entirety and replaced with the following:
The Aggregate Limit is the most we will pay for the sum of:
1. Damages under insuring Agreement A. Bodily Injury and Property Damage, except damages because of bodily injury or property damage included in the products-completed operations hazard;
2. Damages under Insuring Agreement B. Personal and Advertising Injury; and
3. Medical expenses under Insuring Agreement C.
The Aggregate Limit shall apply separately to each location owned or rented by you. ***
ENDORSEMENT NO. 5 SELF INSURED RETENTION ENDORSEMENT ( Expenses within the Self Insured Retention)
It is agreed that Section V, DEDUCTIBLE, in the HEALTHCARE GENERAL LIABILITY COVERAGE PART FOR LONG TERM CARE FACILITIES and Section V, DEDUCTIBLE, in the HEALTHCARE PROFESSIONAL LIABILITY COVERAGE PART FOR LONG TERM CARE FACILITIES are both deleted in their entirety and each is replaced with the following:
A. The First Named Insured shall be responsible for the Self Insured Retention amounts shown below. Expenses incurred by the First Named Insured in investigating and defending claims and suits are included within the Self Insured Retentions. The Self Insured Retention applies separately to each medical incident and to each occurrence to which this policy applies, and the First Named Insured shall not insure against it without our written consent.
1. All claims arising from a single occurrence or continuous, related or repeated occurrences shall be subject to one Self Insured Retention. The Self Insured Retention Occurrence Aggregate stated below is the total amount of damages arising out of all Self Insured Retentions for all occurrences during the policy period.
2. All claims arising from a single medical incident or continuous, related or repeated medical incidents shall be subject to one Self Insured Retention. The Self Insured Retention Medical Incident Aggregate stated below is the total amount of damages arising out of all Self Insured Retentions for all medical incidents during the policy period.
B. We will pay damages only in excess of the Self Insured Retentions stated below. We will not be responsible for payment of amounts within the Self Insured Retentions, which the First Named Insured will be obligated to pay.
C. Our rights and duties with respect to the defense and settlement of claims applies only when an occurrence or medical incident is excess of the Self Insured Retention stated below and only for that portion of the loss which is excess of the Self Insured Retention.
D. The limits of liability as stated in this policy will be reduced by the payment of damages and expenses paid within the Self Insured Retentions.
E. The First Named Insured shall at all times maintain a claims handling service approved by us to handle claims within the Self Insured Retentions.
SCHEDULE OF SELF INSURED RETENTIONS
Self Insured Retention per Occurrence: $250,000
Self Insured Retention Occurrence Aggregate: Not Applicable
Self Insured Retention per Medical Incident: $250,000
Self Insured Retention Medical Incident Aggregate: Not Applicable
II
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . . The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the-party is, therefore, entitled to judgment as a matter of law." (Internal quotation marks omitted.) Connecticut Medical Ins. Co. v. Kulikowski, 286 Conn. 1, 4-5, 942 A.2d 334 (2008).
"[C]onstruction of a contract of insurance presents a question of law for the court which this court reviews de novo . . . An insurance policy is to be interpreted by the same general rules that govern the construction of any written contract . . . In accordance with those principles, [t]he 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. Under those circumstances, the policy is to be given effect according to its terms . . . When interpreting [an insurance policy], we must look at the contract as a whole, consider all relevant portions together and, if possible, give operative effect to every provision in order to reach a reasonable overall result . . .
"In determining whether the terms of an insurance policy are clear and unambiguous, [a] court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity . . . Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms . . . As with contracts generally, a provision in an insurance policy is ambiguous when it is reasonably susceptible to more than one reading . . . Under those circumstances, any ambiguity in the terms of an insurance policy must be construed in favor of the insured because the insurance company drafted the policy . . . This rule of construction may not be applied, however, unless the policy terms are indeed ambiguous." (Internal quotation marks omitted.) National Grange Mutual Ins. Co. v. Santaniello, 290 Conn. 81, 88-89, 961 A.2d 387 (2009).
III A.
The issue is whether, under the circumstances of, and the policy involved in, this case, there is one medical incident or there are many medical incidents resulting in bodily injury to the underlying plaintiffs. As noted previously, the policy contains both professional liability and general liability coverage. It is undisputed that any applicable coverage for the underlying plaintiffs must be found under the professional liability portion of the policy.
Exclusion sixteen in § III.A of the general liability policy specifically states that there is no coverage for "[a]ny bodily injury or property damage sustained by your patients or residents."
The policy defines "medical incident" as "any act, error or omission in the providing of or failure to provide professional services." In turn, "professional services" is defined, in relevant part, as "[m]edical . . . nursing or other health care services including but not limited to the furnishing of food or beverages in connection with such services . . ." The professional liability part, § IV.D, also contains a continuous exposure clause: "[a]ll claims arising from continuous, related, or repeated medical incidents shall be treated as arising out of one medical incident."
Because of this clause, Lexington argues that the court should consider all of the plaintiffs' underlying claims to be one medical incident because they all arise from one event, namely, the fire. If this court concludes that the underlying plaintiffs' claims are, under the policy, one incident, the maximum coverage for all these claims would be limited to $500,000 and reduced by the self-insured retention to $250,000. If the claims constitute multiple incidents, as the underlying plaintiffs and Nationwide argue, then the coverage amount may be significantly more subject to the aggregate limit and the self-insured retention per medical incident.
The issue of whether the continuous exposure clause converts multiple "medical incidents" in a professional liability policy to one medical incident has not been addressed by Connecticut appellate courts. Nevertheless, the issue has been examined in the context of a general liability policy. In Metropolitan Life Ins. Co. v. Aetna Casualty Surety Co., 255 Conn. 295, 313, 765 A.2d 891 (2001), the court identified three different tests that courts have applied in interpreting "occurrence." "In identifying the occurrence or occurrences for insurance purposes, courts have applied three tests . . . Some courts have concluded that an occurrence is determined by reference to the underlying cause or causes of the damage . . . Other courts have concluded that an occurrence is determined based on the effect of the accident . . . Finally, a third group of courts have concluded that an occurrence is determined by reference to the event or events triggering liability on the part of the insured." (Citations omitted.) Id. The court found that the policy's continuous exposure clause could combine thousands of asbestos-related bodily injury claims arising from each claimant's exposure to asbestos at the same place and at approximately the same time into one occurrence, but could not combine claims arising from a failure to warn. Id., 308. The court further explained that "claims resulting from substantially similar conduct cannot be aggregated into one occurrence under a continuous exposure clause." (Emphasis in original.) Id., 309 n. 16. Following New York law, the court adopted the event test and concluded that the clause did not operate to combine exposures that occurred under different circumstances throughout the country over sixty years into one occurrence. Id., 316-17.
In the present case, Lexington urges this court to adopt the event test. Using this test, Lexington argues that the fire was the one event that caused all the injuries which occurred at approximately the same time and in the same place. This court declines to apply the event test here.
Unlike the present case, Metropolitan involved a general liability policy, not a professional liability policy. These two types of policies have different purposes. "[T]he purpose of a commercial general liability policy . . . is to provide coverage for tort liability for physical damage to others." (Internal quotation marks omitted.) Bonded Concrete, Inc. v. Transcontinental Ins. Co., 12 App.Div.3d 761, 762, 784 N.Y.S.2d 212, 213 (2004). "A general liability policy is not intended to encompass the risk of an insured's failure to adequately perform work, i.e., a general liability policy is not a form of performance bond, product liability insurance, or malpractice insurance." (Internal quotation marks omitted.) Goodwin v. Wright, 100 Wash.App. 631, 639, 6 P.3d 1 (2000). "Commercial general liability policies serve a purpose distinct from professional liability policies. A commercial general liability policy provides comprehensive coverage to the insured and can cover the provision of general business activity, while a professional liability policy insures members of a profession from liability arising out of a special risk associated with practicing a particular profession." American Motorists Ins. Co. v. Southern Security Life Ins. Co., 80 F.Sup.2d 1285, 1288 n. 3 (M.D.Ala. 2000). Thus, the Metropolitan analysis, which involved a general liability policy, is not pertinent here.
As stated above, the policy at issue in the present case defines "medical incident" as "any act, error or omission in the providing of or failure to provide professional services." Lexington argues that the underlying plaintiffs present essentially one claim concerning the failure to supervise Andino, but the underlying plaintiffs plead many additional allegations of negligence ranging from the failure to conduct fire drills, to provide sprinklers, to close doors to the patients' rooms, to evacuate patients properly, to assist each patient properly. Indeed, as noted by Lexington, certain underlying plaintiffs allege twenty-six different acts of negligence and twelve acts of recklessness against LHCG and Highgreen. Lexington maintains that these failures were not the proximate cause of the fire and injuries because it was the failure to supervise which led to the fire.
Lexington's interpretation is, however, based upon the event test used to evaluate "occurrence" in a general liability policy. In Lexington's memorandum in support of its motion for summary judgment, Lexington admits that "it may not make sense to determine the number of medical incidents (the insured's health care service acts or omissions) by looking to the event or accident." This court agrees. The policy defines "occurrence" as "an accident." "Accident" denotes "an unforeseen unplanned event or condition." See Webster's Third New International Dictionary. By comparison, "medical incident" focuses on acts or omissions by virtue of the policy's definition of professional services. Generally, "act" is defined as "a thing done or being done" and "omission" means "something neglected or left undone." See Webster's Third New International Dictionary. In short, acts and/or omissions constitute "conduct." See American Heritage Dictionary of the English Language (2d College Ed. 1982) (defining "conduct" as "the way a person acts; behavior"); see also Certain Underwriters at Lloyd's, London v. Cooperman, 289 Conn. 383, 408, 957 A.2d 836 (2008) ("[t]he date of the act or omission complained of is the date when the . . . conduct of the defendant occurs" [internal quotation marks omitted]).
From these definitions, it is clear that Lexington's professional malpractice policy is concerned with conduct and is measured in terms of acts and/or omissions whereas liability under the general liability policy is gauged by accidents and/or occurrences. As discussed above, our Supreme Court stated in Metropolitan that "claims resulting from substantially similar conduct cannot be aggregated into one occurrence under a continuous exposure clause." (Emphasis in original.) Metropolitan Life Ins. Co. v. Aetna Casualty Surety Co., supra, 255 Conn. 309 n. 16. Looking to the allegations of the underlying complaints, there are generally two medical incidents, or omissions, as to each underlying plaintiff: 1) the failure to maintain a safe facility, which encompasses the failure to supervise Andino; and 2) the failure to respond properly to the fire, which includes the failure to evacuate all patients and to properly treat those evacuated.
In Lexington's reply to the underlying plaintiffs' memorandum in opposition to the motion for summary judgment, filed October 14, 2008, Lexington argues that the underlying plaintiffs do not allege a failure to evacuate or a failure to render proper medical assistance in their complaints. Construing the underlying complaints most favorably for the pleaders, this simply is not the case. Each complaint alleges, or can be construed to infer, that the failure to respond properly to the fire, including the failure to evacuate, is contained in the negligence allegations. For example, Kholod's amended complaint, dated February 22, 2006 and attached to Lexington's original complaint at exhibit B, alleges that the nursing home was "unable to effectively evacuate the patients who were unable to leave on their own due to their physical infirmities and/or illnesses." Additionally, Morin's original complaint, attached to Lexington's original complaint at exhibit I, and amended complaint, filed October 3, 2006, alleges that Greenwood staff members failed to respond to the fire in accordance with Greenwood's fire drill plan. This allegation may fairly and reasonably be construed to include the failure to evacuate patients, particularly in light of their inability to evacuate themselves.
Failure to provide proper medical care to those evacuated is a subset of the failure to respond properly to the fire. Nevertheless, it is noted that some of the underlying plaintiffs, who were evacuated from the building, alleged that they were subject to freezing temperature while they waited for transport to a medical facility?or, in one case, left wandering and unattended outside the nursing home.
Lexington argues that, even if these claims can be considered multiple medical incidents, they are "related" under the continuous exposure clause of the policy, which states, in part, that "[a]ll claims arising from continuous, related, or repeated medical incidents shall be treated as arising out of one medical incident." The underlying plaintiffs assert that the provision is ambiguous because it is subject to more than one interpretation. They argue that the nursing home owed a duty to provide professional services to each patient and that "related" could apply to several "related" services due a particular patient and it could also combine the "related" injuries of all patients.
Under Connecticut law, an ambiguity is construed in favor of the insured. "The [i]nterpretation of an insurance policy . . . involves a determination of the intent of the parties as expressed by the language of the policy . . . [including] what coverage the . . . [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy . . . [A] contract of insurance must be viewed in its entirety, and the intent of the parties for entering it derived from the four corners of the policy . . . [giving the] words . . . [of the policy] their natural and ordinary meaning . . . [and construing] any ambiguity in the terms . . . in favor of the insured." (Internal quotation marks omitted.) Connecticut Ins. Guaranty Assn. v. Fontaine, 278 Conn. 779, 784-85, 900 A.2d 18 (2006). "[A] provision in an insurance policy is ambiguous when it is reasonably susceptible to more than one reading . . . Under those circumstances, any ambiguity in the terms of an insurance policy must be construed in favor of the insured because the insurance company drafted the policy." (Internal quotation marks omitted.) National Grange Mutual Ins. Co. v. Santaniello, supra, 290 Conn. 89.
"Related" is not defined in the policy. In the dictionary, "related" is defined as "having relationship: connected by reason of an established or discoverable relation . . ." See Lombardo's Ravioli Kitchen, Inc. v. Ryan, 268 Conn. 222, 233, 842 A.2d 1089 (2004). Obviously, this is very broad and may lead to many scenarios where claims involving one plaintiff or many plaintiffs could be interpreted as "related." Some courts have found "related" to be ambiguous and have construed the policy for the insured. See McCuen v. American Casualty Co. of Reading, Pennsylvania, 946 F.2d 1401, 1408 (8th Cir. 1991) (finding that terms "similar" and "interrelated" were "so elastic, so lacking in concrete content, that they import into the contract . . . substantial ambiguities"); Home Ins. Co. of Illinois v. Spectrum Information Technologies, Inc., 930 F.Sup. 825, 848 (E.D.N.Y. 1996) (holding that phrase "same wrongful act or interrelated, repeated or continuous wrongful acts" was, at best, ambiguous); St. Paul Fire Marine Ins. Co. v. Chong, 787 F.Sup. 183, 187-88 (D.Kan. 1992) (construing policy for insured because term "related" and phrase "series of related wrongful acts" were ambiguous); but see Continental Casualty Co. v. Wendt, 205 F.3d 1258, 1262-63 (11th Cir. 2000) (finding "related" to be unambiguous); Gregory v. Home Ins. Co., 876 F.2d 602, 606 (7th Cir. 1989) (recognizing that common understanding of word 'related' covers broad range of connections, both causal and logical, but finding that rule requiring insurance policies be construed against party who chose language does not require drastic restriction of scope of definition of 'related'); National Union Fire Ins. Co. of Pittsburgh v. Ambassador Group, Inc., CT Page 6513 691 F.Sup. 618, 622-23 (E.D.N.Y. 1988) (finding that policy language, i.e., "same interrelated acts," was clear); Bay Cities Paving Grading, Inc. v. Lawyers' Mutual Ins. Co., 5 Cal. 4th 854, 855 P.2d 1263, 1274, 21 Cal.Rptr.2d 691 (1993) (holding that "'related' is not ambiguous and is not limited only to causally related acts").
This court agrees that "related" is indeed ambiguous as it has, at least, two reasonable, but different meanings in this case: related could apply to different but connected services delivered to a particular patient, but it could also mean similar or related services delivered to a number of patients. There is nothing in the policy that provides the answer. Hence, this court finds under the doctrine of contra proferentem that the claims as to all of the underlying plaintiffs are not related and are not one medical incident.
"If the policy is ambiguous, extrinsic evidence may be introduced to support a particular interpretation." (Internal quotation marks omitted.) Metropolitan Life Ins. Co. v. Aetna Casualty Surety Co., supra, 255 Conn. 306. As to this issue, no party offers such evidence.
At least two courts concur and have found that the word "related" did not combine the claims of multiple plaintiffs into one claim under a professional liability policy. For example, in Harris Methodist Health System v. Employers Reinsurance Corp., United States District Court, Docket No. 3:96-CV-0054-R, 1997 U.S. Dist Lexis 23660, *2 (N.D.Tex. 1997), several individuals were exposed by an employee to hepatitis C while being treated as patients at a hospital or through contact with exposed patients' blood. In determining whether the multiple exposures constituted one or more medical incidents, the court found "each claim must be considered 'one medical incident' since each person, as the definition states, received separate treatments and services thereby creating separate incidents." Id., *20-*21.
The court also held, "However, with respect to the Claimants that have alleged exposure to the virus resulted from exposure to a patient that received medical services, these Claimants as well as the patient Claimant that they were exposed to should be considered as one medical incident. This must be so because the definition clearly states that 'all related acts or omissions in the furnishing of such services' must be considered one medical incident (emphasis added). If the non-patient Claimant was not a direct recipient of professional health care services but was injured as a result of exposure to a patient that was harmed as a result of a medical incident, then those two claims must be considered as one medical incident under the definition contained in the Policy." Id., *21.
In another case, five siblings injured by lead poisoning sued their lawyer for mishandling their case. Beale v. American National Lawyers Ins. Reciprocal, 379 Md. 643, 645, 843 A.2d 78 (2004). The claims of the five children were identical; id., 647; and the defendant argued that the claims were the same or "related," but the court held otherwise. Id., 660. "The attorney in this case undertook to represent each of the Beale children. Although each of them had been exposed to, and poisoned by, the lead paint in the house that they shared and, therefore, those were facts in common to all, their cases were not at all identical. The extent of the poisoning and, hence, the injury to each child and, ultimately, the amount of damages to which each was entitled as a result were, and are, clear differences. Consequently, the result in one case would not foreshadow, necessarily, the result in any of the others. Moreover, the attorney owed a duty to each of the children; he could not rely on the service rendered in one case being sufficient to meet the needs of the client in any of the other cases. In other words, an investigation as to one child, or having that child examined, applies only with respect to that child; it provides no information with respect to, and furthers not at all, the case of any other child. Thus, while the same skill set and process, those proven to be effective in the representation of clients lead paint cases, may have been applicable to the handling of all of the Beale cases, because of the individual differences in the children and the distinct and separate duty that the attorney owes to each, the utilization of those skills and process in the rendering of professional services on behalf of one of the children is not the same professional service as, or even related to, the professional services that must be rendered on behalf of the other children. By parity of reasoning, an omission — the failure to utilize the skills and process, thus neglecting each of the cases, does not make related, or the same, that which would not have been related, or the same, if it were an action." Id., 666-67.
The present case is similar to Beale: separate duties were owed by the nursing home staff to each patient and the collective failure to take the appropriate action for each patient does not make the several claims related. The patients were differently situated. For example, according to the underlying plaintiffs' complaints, Andino, who was allegedly in her twenties, was diagnosed with depression, multiple sclerosis, impaired gait and seizures while her roommate, Morin's decedent, was elderly and immobile. Additionally, Kholod's decedent, Ruditser, had improved to the point where she was about to be discharged from Greenwood. These allegations illustrate that the patients were individuals with different needs both in residence at the facility and during their evacuations — failed or otherwise. The facility undertook each individuals' care, which under Lexington's definition of "medical incident" included basics like providing food and beverages. Although each of the patients involved in this case was exposed to the fire, their claims are not identical — they each had different needs. The injury to each individual and the amount of damages to which each may be entitled are clear differences. The facility owed a duty to each patient; it could not rely on the services to one patient to meet the needs of all. And it most certainly could not rely on the evacuation of one patient as to all. Thus, the care, treatment and evacuation, or lack thereof, of one patient is particular to the individual and does not shed any light on the care, treatment and evacuation of another. Consequently, while the same skills and procedures proven effective in the treatment and evacuation of the patients, may have been applicable to all of the nursing home's patients, because of the individual differences in the patients and the distinct and separate duty that facility owed to each, the utilization of those skills and process in the rendering of professional services on behalf of each of them is not the same professional service as, or even related to, the professional services that must be rendered on behalf of the others. See CT Page 6515 Beale v. American National Lawyers Ins. Reciprocal, supra, 379 Md. 666-67.
A newspaper article, attached to the memorandum of law in support of Kholod's motion for summary judgment, on the fire gives details of the evacuation. For example, firefighters, staff and residents tried to rescue an underlying plaintiff's decedent from the fire, but had to leave her. Others tried to save another patient whose legs had been amputated by lowering him out a window, but also had to abandon him when conditions got worse. In yet another example, a different patient was evacuated but died later at Hartford Hospital.
The underlying plaintiffs point out that nursing home fires are more common, unfortunately, than one might think. If Lexington wished to except all or most coverage for a fire, such as the one here, it could have done so specifically and unambiguously so that the insured had a clear understanding of what its exposure, particularly in a nursing home context or any institutional setting, would have been in case of fire.
In sum, the court finds that the continuous exposure clause combines only those claims with regard to the individual, underlying plaintiffs and not those of all the underlying plaintiffs. Consequently, there are thirteen separate "medical incidents" in this case.
B.
The next issue is the amount of the aggregate limit of the policy. Lexington argues that, even if the claims are not related, they are still subject to the aggregate limit which, under the policy's declarations section, is $1 million. All parties recognize that the aggregate limit endorsement, Endorsement No. 3, amended the aggregate limit from $1 million to $10 million. Nevertheless, Lexington argues that this was meant to be a cap for all seven locations covered under the policy and that each facility, including Greenwood, is limited to $1 million. Lexington also asserts that the aggregate limit is ambiguous because the declarations page, item five, § a, states that the limit is $1 million.
"A rider or endorsement is a writing added or attached to a policy or certificate of insurance which expands or restricts its benefits or excludes certain conditions from coverage . . . When properly incorporated into the policy, the policy and the rider or endorsement together constitute the contract of insurance, and are to be read together to determine the contract actually intended by the parties." (Citation omitted; internal quotation marks omitted.) National Grange Mutual Ins. Co. v. Santaniello, supra, 290 Conn. 93.
Section II.A of the aggregate limit endorsement states that "[t]he Aggregate Limit is the most we will pay for the sum of all damages under this Coverage Part. The Aggregate Limit shall apply separately to each location owned or rented by you." Indeed, Lexington has not pointed to anywhere in the policy where it states that the aggregate limit of $1 million shall apply to each location. Rather, the endorsement states in § II.A that the declaration aggregate amount in "Section IV. Limits of Insurance, Item B. is deleted in its entirety and replaced" with the language set forth above. Moreover, § II.A is preceded by this introduction: "Subject to the Aggregate Policy Limit stated in item I. above." Thus, the court finds that the aggregate limit is clearly and unambiguously $10 million and not $1 million. Consequently, the aggregate limit found in the declarations is irrelevant. See Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., 290 Conn. 767, 806-07 (2009) ("[I]f the court concludes that the endorsement itself is clear and unambiguous, the content of the form policies themselves is irrelevant for purposes of the motion because '[e]ndorsement' has also been defined generally to mean '[a] written or printed form attached to the policy which alters provisions of the contract,' and the word 'alter' is synonymous with 'change.' . . . Even a policy provision that contradicts directly the terms of the endorsement is irrelevant to the disposition of the summary judgment motion." [Internal quotation marks omitted]).
Instead, Lexington attempts to distinguish "Aggregate Policy Limit" from "Aggregate Limit." Lexington argues that "Aggregate Policy Limit" is defined in the aggregate limit endorsement as the most Lexington will pay in any one year for the sum of all damages payable under the professional liability and general liability policies. Nevertheless, such a definition does not compel the court to conclude that there is a difference between "Aggregate Policy Limit" and "Aggregate Limit," particularly because "Aggregate Limit" is not defined. Nor does it lead to the conclusion that "Aggregate Limit" means the aggregate limit per location.
Additionally, Lexington cites to no legal authority, nor does research reveal any Connecticut authority, on a difference. Perhaps it is no more than shorthand or scrivener's error. Furthermore, "any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms." (Internal quotation marks omitted.) National Grange Mutual Ins. Co. v. Santaniello, supra, 290 Conn. 89.
C. CT Page 6516
Lexington also argues that, under the policy's self-insured retention endorsement, Endorsement No. 5, § C, it is entitled to reduce any amount it would be obligated to pay by as "[o]ur rights and duties with respect to the defense and settlement of claims applies only when an occurrence or medical incident is excess of the Self Insured Retention stated below and only for that portion of the loss which is excess of the Self Insured Retention." The self-insured retention is $250,000 for each medical incident. Section D states that "[t]he Limits of Liability as stated in this policy will be reduced by the payment of damages and expenses paid within the Self Insured Retentions." The underlying plaintiffs and Nationwide argue that the reduction is solely based upon the amounts paid by the insured and, in this case, LHCG now in bankruptcy, never paid any money.Lexington cites several cases from other states to support its argument. See, e.g., Home Insurance Co. of Illinois v. Hooper, 294 Ill.App.3d 626, 633, 691 N.E.2d 65, 70, cert. denied, 178 Ill.2d 576, 699 N.E.2d 1031 (1998) (finding that insurer obligated to insured for that portion of judgment exceeding self-insured retention, irrespective of insured's inability to pay retention amount); Kleban v. National Union Fire Ins. Co. of Pittsburgh, Pennsylvania, 2001 Pa.Super. 92, *P10, 771 A.2d 39, 43 (2001) ("self insured retention is . . . not an amount that is owed by the insured to [the insurer] but, rather, represents the threshold of [the insurer's] liability to the [insured]" [internal quotation marks omitted]). The underlying plaintiffs argue that these cases are inapposite because the policy in the present case did not contain specific language dealing with bankruptcy, e.g., "your bankruptcy . . . or inability to pay the retention amount shall not increase our obligation under this policy." They maintain that if the policy language conflicts then this court should find that it is ambiguous and that the doctrine of contra proferentem applies.
This court finds that use of the word "paid" does not make the policy language ambiguous. Section B of the self-insured retention endorsement clearly states that Lexington "will pay damages only in excess of the Self Insured Retentions stated below" and "will not be responsible for payment of amounts within the Self Insured Retentions, which the First named Insured will be obligated to pay." Additionally, § B is reinforced by §§ A and C. In sum, Lexington agreed to pay amounts in excess of the self-insured retention; LHCG agreed to the self-insured retention. LHCG's inability to pay does not switch the burden to pay to Lexington; it is only responsible to pay those amounts in excess of the self-insured retention with a maximum policy coverage of $500,000 per each medical incident up to the $10 million aggregate limit. See Home Insurance Co. of Illinois v. Hooper, supra, 294 Ill.App.3d 633.
The underlying plaintiffs do not respond to Lexington's assertions that it is not responsible for the payment of punitive damages or that it has no duty to defend once the policy proceeds are distributed. The court agrees, however, with Lexington that the policy is clear and unambiguous regarding these issues. The professional liability part explicitly states that Lexington will not pay punitive damages in § III.A. 19 and that Lexington's duty to defend ends once the policy proceeds are distributed in § 1.
IV
For the foregoing reasons, Lexington's motion for summary judgment is denied in part and granted in part and the underlying plaintiffs' motions for summary judgment are granted in part and denied in part. Insofar as Nationwide argues that there are separate medical incidents as to each underlying plaintiff and that the aggregate limit of the policy is $10 million, Nationwide's motion for summary judgment is granted.
In all other respects, Nationwide's motion for summary judgment is not addressed. See footnote 3 of this memorandum of decision.