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OHIO CASUALTY GROUP INSURANCE COMPANIES v. ARGONAUT INSURANCE COMPANY AND THOMAS J. JUDGE (11/04/85)

COMMONWEALTH COURT OF PENNSYLVANIA


decided: November 4, 1985.

THE OHIO CASUALTY GROUP OF INSURANCE COMPANIES, PETITIONER
v.
ARGONAUT INSURANCE COMPANY AND THOMAS J. JUDGE, SR., AS DIRECTOR OF THE MEDICAL PROFESSIONAL LIABILITY CATASTROPHE LOSS FUND OF THE COMMONWEALTH OF PENNSYLVANIA, RESPONDENTS

Original Jurisdiction in case of The Ohio Casualty Group of Insurance Companies v. Argonaut Insurance Company and Thomas J. Judge, Sr., as Director of the Medical Professional Liability Catastrophe Loss Fund of the Commonwealth of Pennsylvania.

COUNSEL

Patrick J. Shannon, Ronald H. Heck and Associates, P.C., for petitioner.

David H. Trushel, Trushel, Wood & Israel, for respondent, Argonaut Insurance Company.

Gwendolyn T. Mosley, Deputy Attorney General, with her, Allen C. Warshaw, Chief Deputy Attorney General, Chief, Litigation Section, and LeRoy S. Zimmerman, Attorney General, for respondent, Thomas J. Judge, Sr.

Judges Rogers and MacPhail, and Senior Judge Barbieri, sitting as a panel of three. Opinion by Judge MacPhail.

Author: Macphail

[ 92 Pa. Commw. Page 562]

Before us are a motion for partial summary judgment filed by the Argonaut Insurance Company (Argonaut) and the preliminary objections filed by the Director of the Medical Professional Liability Catastrophe Loss Fund (Fund)*fn1 to a petition for review filed by the Ohio Casualty Group of Insurance Cos. (Ohio Casualty). We will deny the motion for partial summary judgment and overrule the preliminary objections.

In order to understand the contentions of each party, it is necessary to examine the underlying medical malpractice claim.*fn2 On or about July 16, 1975, Joyce Mihelic (patient) was involved in a serious motorcycle accident. The patient was admitted to Lee Hospital (hospital) in Johnstown, Pennsylvania, suffering from a supracondular fracture of her right femur in addition to multiple abrasions and lacerations. Dr. William Davison treated the patient, placing a long leg cast on the patient's right leg.

On September 26, 1975, the patient returned to Dr. Davison for removal of the cast. Although x-rays revealed that the leg had not properly healed, Dr. Davison removed the cast.

[ 92 Pa. Commw. Page 563]

On November 4, 1975, the patient was readmitted to the hospital suffering from complications with her leg. Although the patient was discharged on December 23, 1975, she was readmitted to the hospital on July 27, 1976, again with complaints concerning her leg. Dr. Davison, after examining the patient, concluded that a previously inserted condular plate should be removed from the patient's leg.

On July 28, 1978, the patient underwent surgery for removal of the condular plate, with Dr. Davison performing the surgery. Dr. Davison neglected to administer post-operative antibiotic spray. The patient was discharged from the hospital on August 5, 1976.

On October 19, 1976, the patient was admitted to the emergency room at the hospital where an examination revealed the presence of infection in the distal femur and an infected non-union. A previous examination performed by Dr. Davison had not disclosed any infection.

The patient subsequently retained the services of another physician and instituted a malpractice action against Dr. Davison. Dr. Davison referred the medical malpractice action to Argonaut, his basic insurance carrier.*fn3

A settlement of $145,000 proposed by the patient was taken under consideration by Argonaut. On or about September 21, 1981, the patient underwent knee surgery and the settlement proposal was withdrawn.

[ 92 Pa. Commw. Page 564]

On November 19, 1983, the medical malpractice action was settled for $455,000. Argonaut contributed $200,000 to the settlement. Ohio Casualty, as Dr. Davison's excess insurer, provided the difference.*fn4

In this original action,*fn5 Ohio Casualty alleges (1) that Argonaut acted in bad faith and without due care when it refused to accept the $145,000 proposed settlement;*fn6 (2) that there was not one but two separate occurrences of medical malpractice*fn7 and that therefore, Argonaut must contribute an additional $100,000 for the second act of malpractice; and (3) that because the second act of medical malpractice occurred after the effective date of the Act, the Fund was under a statutory obligation to contribute to the settlement.*fn8 See Section 705(a) of the Act, 40 P.S. § 1301.705(a).

[ 92 Pa. Commw. Page 565]

We will first address Argonaut's motion for partial summary judgment. We note that "[a] summary judgment may be properly entered only where the moving party has established that there remains no genuine issue of material fact and that it is entitled to judgment as a matter of law." Peters Township School Authority v. United States Fidelity and Guaranty Co., 78 Pa. Commonwealth Ct. 365, 369, 467 A.2d 904, 906 (1983). The moving party must sustain the heavy burden of proving that its right to summary judgment is clear. Zeck v. Balsbaugh, 66 Pa. Commonwealth Ct. 448, 445 A.2d 253 (1982). It is this Court's duty to examine the record in the light most favorable to the non-moving party. Burd v. Department of Transportation, 66 Pa. Commonwealth Ct. 129, 443 A.2d 1197 (1982), rev'd on other grounds, Scanlon v. Department of Transportation, 502 Pa. 577, 467 A.2d 1108 (1983). Any doubts as to the existence of a genuine issue of material fact are to be resolved against the moving party. Donnell v. Pennsylvania Board of Probation and Parole, 70 Pa. Commonwealth Ct. 265, 453 A.2d 36 (1982) (per curiam).

It is clear from a reading of the sparse record in the instant case that Argonaut has not sustained its heavy burden. Argonaut has asked this Court as a matter of law to determine that there was only one occurrence of medical malpractice when it readily appears that this is a question of fact.*fn9 Accordingly, we must deny the motion for partial summary judgment.

[ 92 Pa. Commw. Page 566]

We now turn to the preliminary objections the Fund filed to the petition for review. We are mindful that in reviewing preliminary objections, only facts that are well-pleaded, material and relevant will be considered as true; only such reasonable inferences as may be drawn from these facts may be admitted; that conclusions of law, argumentative allegations, expressions of opinion and unreasonable inferences will not be admitted; and preliminary objections will only be sustained if they are clear and free from doubt. City Firefighters' Association v. Philadelphia, 65 Pa. Commonwealth Ct. 283, 442 A.2d 393 (1982).

The basis underlying the Fund's preliminary objections is that Ohio Casualty has not exhausted administrative remedies. Under the doctrine of exhaustion of administrative remedies, one must exhaust all available adequate administrative remedies before resorting

[ 92 Pa. Commw. Page 567]

    to the courts. See Shenango Valley Osteopathic Hospital v. Department of Health, 499 Pa. 39, 451 A.2d 434 (1982). The Fund contends that 1 Pa. Code Part II, applicable to the "activities of and proceedings before" the Fund by virtue of the Fund regulations, 31 Pa. Code §§ 242.1-242.20, contains a detailed and thorough procedure whereby Ohio Casualty should have filed a formal complaint with the Fund. See 1 Pa. Code § 35.9 ("Any person complaining of anything done or omitted to be done by any person subject to jurisdiction of an agency, in violation of a statute or regulation administered or issued by the agency, may file a complaint with the agency."). Ohio Casualty argues that the complaint process does not provide an adequate remedy. We agree.

Whether or not the Fund is liable over to Ohio Casualty is dependent upon a resolution of whether there were one or two occurrences of medical malpractice. The resolution of this issue is not within the Fund's specialized knowledge but rather is a question of fact appropriate for an impartial fact-finder. Unlike claims brought by patients or their representatives, which are under the original exclusive jurisdiction of an arbitration panel, Section 309 of the Act, 40 P.S. § 1301.309, there is no specific statutory provision regarding claims between insurance companies and the Fund. We believe that the Fund regulations do not address the latter claims. Additionally, we note that although Section 702(f) of the Act, 40 P.S. § 1301.702(f) authorizes the director of the Fund to "defend, litigate, settle or compromise any claim payable by the [F]und," the director is not authorized to determine the outcome of such claims. Section 702(f) of the Act contemplates the Fund being involved in litigation concerning the claims, which is exactly the situation the instant case presents: the Fund must "defend,

[ 92 Pa. Commw. Page 568]

    litigate, settle or compromise" its position that it is not liable over to Ohio Casualty. Compare Judge v. Allentown and Sacred Heart Hospital Center, 506 Pa. 636, 641, 487 A.2d 817, 819 (1985), slip op. at 6 (Although agency may not "exceed the limitations which have been established by the Legislature for the agency's exercise of its own authority", this rationale "does not support a limitation on the ability of an agency to enforce its rights or seek a remedy in a judicial forum."). We will overrule the preliminary objections.

Order

The Argonaut Insurance Company's motion for partial summary judgment is denied. The preliminary objections raised by the Director of the Medical Professional Liability Catastrophe Loss Fund are overruled. Leave is granted to the Director of the Medical Professional Liability Catastrophe Loss Fund to file an answer to the petition for review within twenty (20) days of receipt of this opinion and order.

Date: November 4, 1985.

Order

And Now, January 6, 1986, the order entered November 4, 1985 is amended to read as follows:

Amended Order

The Argonaut Insurance Company's motion for partial summary judgment is denied. The preliminary objections raised by the Director of the Medical Professional Liability Catastrophe Loss Fund are overruled. Leave is granted to the Director of the Medical Professional Liability Catastrophe Loss Fund to file an answer to the Petition for Review within twenty (20) days of receipt of this opinion and order.

[ 92 Pa. Commw. Page 569]

This order involves a controlling question of law as to which there is substantial ground for difference of opinion. An immediate appeal from this order may materially advance the ultimate termination of this matter.

Date: January 6, 1986.

Disposition

Motion for partial summary judgment denied. Preliminary objections overruled. Fund director granted leave to file answer to petition for review within twenty (20) days hereof.


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