Original Jurisdiction in the case of In Re: N. Adele Finkbiner and J. Harry Finkbiner v. Medical Professional Liability Catastrophe Loss Fund and Thomas J. Judges, Sr. and Harry J. Keogh.
Stephen R. Kurens, with him, Arnold M. Kessler, Arnold M. Kessler Associates, for petitioners.
Claudia M. Tesoro, Deputy Attorney General, with her, John G. Knorr, III, Chief Deputy Attorney General, and LeRoy S. Zimmerman, Attorney General, for respondents.
Judges Craig, Barry and Smith, sitting as a panel of three. Opinion by Judge Craig.
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N. Adele and J. Harry Finkbiner filed a complaint, in this court's original jurisdiction, to recover money from the Medical Professional Liability Catastrophe Loss Fund, (CAT Fund) its director, Thomas J. Judges, and a claims examiner, Harry J. Keogh.
The issue, raised by the Commonwealth's demurrer, is whether the CAT Fund can be liable for a bad faith refusal to settle, like a private insurer. This court will sustain the demurrer.
In considering preliminary objections, in the nature of a demurrer, this court must accept as true all well pleaded averments in the Finkbiners' complaint. Gekas v. Shapp, 469 Pa. 1, 364 A.2d 691 (1976). Moreover, a court should grant a demurrer only when the law clearly permits no recovery under the allegations pleaded. Commonwealth v. Monumental Properties, 459 Pa. 450, 329 A.2d 812 (1974).
The facts as pleaded by the Finkbiners are as follows: The Finkbiners brought a malpractice action against Dr. Mauriello, for injuries suffered by Mr. Finkbiner during a surgical procedure. Dr. Mauriello, as required by Section 701 of the Health Care Services Act, Act of October 15, 1975, P.L. 390, as amended, 40 P.S. § 1301.701, was insured for liability up to $100,000 by the Medical Protective Company and had excess coverage of $1,000,000 through the CAT Fund. In accordance with the Act, Dr. Mauriello's counsel informed the CAT Fund that the Finkbiners' claim could exceed the $100,000 limit. Some time before trial, Dr. Mauriello conceded liability and his insurance company tendered the policy limits to the Finkbiners. Negotiations began between counsel representing the Finkbiners, Dr. Mauriello and the CAT Fund. Shortly before trial the CAT Fund offered to settle the case for $500,000. The Finkbiners refused and demanded
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$3,000,000. The CAT Fund increased its offer to $900,000 but the Finkbiners refused to settle for less than $1,000,000. Counsel for Dr. Mauriello repeatedly advised the CAT Fund to settle for $1,000,000. The CAT Fund refused and the case went to trial. The jury returned a verdict in favor of the Finkbiners for more than $2,000,000. The CAT Fund paid the Finkbiners $1,000,000. Thus, Dr. Mauriello remains liable to the Finkbiners for approximately $950,000 for the jury verdict and another $600,000 in delay damages imposed by the judge.
The Finkbiners, asserting the rights of Dr. Mauriello, who assigned his rights to them, have brought this case against the CAT Fund to recover the amount of Dr. Mauriello's outstanding liability to the Finkbiners, based on the CAT Fund's alleged bad faith refusal to settle the malpractice suit.
The Commonwealth, in support of its demurrer, contends that, because a bad faith refusal to settle a case is a cause of action that sounds in contract, jurisdiction for this suit is with the Board of Claims. Second, the Commonwealth asserts that the CAT Fund cannot be liable for bad faith refusal to settle a case because, in paying the $1,000,000, it has discharged its full obligation under the Act. Finally, the Commonwealth asserts that, should this court ...