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Gingerlowski v. Commonwealth

November 19, 2008

PATRICIA GINGERLOWSKI, AS PARENT AND NATURAL GUARDIAN OF FELICIA PHILLIPS, A MINOR, AND FELICIA PHILLIPS, ON HER OWN BEHALF, PETITIONERS
v.
COMMONWEALTH OF PENNSYLVANIA, INSURANCE DEPARTMENT, MEDICAL CARE AVAILABILITY AND REDUCTION OF ERROR FUND, (THE MCARE FUND), SUCCESSOR AND INTEREST TO THE MEDICAL PROFESSIONAL LIABILITY CATASTROPHE LOSS FUND, (CAT FUND), DEFENDANT RAOUFE HANNA, M.D., RESPONDENTS



Per curiam.

ORDER

AND NOW, this 3rd day of December, 2008, it is ordered that the above-captioned opinion filed on November 19, 2008, shall be designated OPINION, rather than MEMORANDUM OPINION, and it shall be reported.

HONORABLE ROBERT SIMPSON, Judge

OPINION

In this Court's original jurisdiction, Patricia Gingerlowski, as parent and natural guardian of Felicia Phillips (Patient), and Patient, on her own behalf, (collectively, Petitioners), filed a complaint for declaratory judgment against the Pennsylvania Insurance Department, Medical Care Availability and Reduction of Error Fund (MCARE Fund), as successor in interest to the Medical Professional Liability Catastrophe Loss Fund (CAT Fund), (collectively, the Fund) and Raoufe Hanna, M.D. (Provider). Petitioners seek a declaration that the Fund is required by Section 605 of the former Health Care Service Malpractice Act (Malpractice Act),*fn1 to defend and indemnify Provider, a pediatrician in Petitioners' pending medical malpractice action against Provider in Lackawanna County Common Pleas Court (common pleas).

Presently before me is the Fund's motion for summary judgment. The Fund, citing the Malpractice Act, Fund regulations and case law, asserts it is entitled to summary judgment for two fundamental reasons. First, Provider failed to purchase a reporting endorsement, commonly known as "tail" coverage, or its substantial equivalent, following his cancellation of his primary professional liability "claims made"*fn2 policy in July 1989. Second, Provider did not participate in the Fund or pay a Fund surcharge since July 1989. Thus, the Fund asserts it is not obligated under Section 605 of the Malpractice Act to provide indemnification and defense for a claim reported after Provider's cancellation of his claims made primary coverage.

Also me is the Fund's alternative petition for leave to amend new matter in order to assert statute of limitations and laches defenses.

I. Background

Petitioners' complaint alleges as follows. Provider, a pediatrician and general practitioner, practiced medicine in Pennsylvania from approximately 1976 to July 1989. During this time, he maintained his primary professional liability insurance with the Pennsylvania Medical Society Liability Insurance Company (Insurer). Provider's policy was a claims made policy, which provided for a reporting endorsement, commonly known as tail coverage. The reporting endorsement provided:

In the event of termination of insurance either by non-renewal or cancellation of this policy, or termination of reporting period the insured shall have the right upon payment of an additional premium (to be computed with the companies [sic] rules, rates, rating plans and premiums applicable on the effective date of the endorsement), to have issued an endorsement providing and [sic] additional REPORTING PERIOD in which claims otherwise covered by this policy maybe reported. Such right here under must, however, must [sic] be exercised by the insured by purchase of extended reporting endorsement at any time within the sixty (60) day period [following] the effective date of cancellation o[r] non-renewal. The endorsement shall afford limits of liability for extended reporting period in the amounts of $200,000.00 for each claim and $600,000.00 annual aggregate.

Compl. at ¶25.

Also, while he practiced in Pennsylvania, Provider maintained excess professional liability coverage with the Fund. However, when Provider cancelled his claims made policy in July 1989, he did not purchase tail coverage for it, and he no longer participated in the Fund.

On December 20, 1986, Patient was born at Community Medical Center (CMC) in Scranton. While hospitalized at CMC, she came under Provider's care until December 22, 1986. Following her birth, Provider performed routine tests on Patient's hips. Thereafter, and subsequent to discharge, Provider performed a number of examinations of Patient, including an orthopedic evaluation of her hips. In January 1988, Patient's mother alerted Provider to Patient's limp.

In June 1989, Provider relocated from Pennsylvania to California and later to Arizona. In June 1990, Patient came under the care of a new pediatrician who diagnosed congenital hip dislocation, also known as developmental hip dysplasia. In October 1990, Patient underwent referral for orthopedic treatment, which confirmed the diagnosis of congenital hip dislocation. Thereafter, Patient underwent several surgeries and extended physical therapy. Patient still suffers from extended disability and profound scarring as a consequence of Provider's failure to diagnosis her congenital hip dislocation.

In April 1994, Petitioners initiated a medical malpractice claim against Provider by writ of summons. Six days later, Insurer advised Petitioners it would not provide coverage for Provider because he failed to purchase the reporting endorsement on termination of his Pennsylvania practice. In a 1996 deposition in the common pleas action, Provider testified Insurer never notified him of the tail coverage requirement. Provider stated he would have purchased a tail policy if he received such notice.

In July 1994, Petitioners notified the Fund of Patient's malpractice claim against Provider, thereby placing the Fund on notice the claim fell under Section 605 of the Malpractice Act. They allege, under the circumstances here, Section 605 required the Fund to provide Provider with both primary and excess coverage for Petitioners' claims. Petitioners further allege the statute of limitations applicable to Patient, a minor, is 20 years from her birth and that it did not expire until December 2006.*fn3

In response, the Fund took the position it would neither defend nor indemnify or assume the liability of Provider for his medical negligence because he failed to purchase tail coverage.

In October 1994, Patient and her parents filed a malpractice complaint in common pleas against Provider and CMC. Provider failed to file an answer, enter an appearance, or answer a request for admissions. In February 1997, common pleas entered a default judgment against Provider.

In November 2006, Petitioners filed this declaratory judgment action against the Fund and Provider. Petitioners seek a declaration that the Fund is required to defend and indemnify Provider in the common pleas action and provide primary and excess coverage for their claims.

After its preliminary objections were overruled,*fn4 the Fund filed an answer and new matter alleging Provider is not eligible for Section 605 coverage because he did not purchase the required tail coverage on the cancellation of his claims made policy in July 1989. Consequently, he did not have basic insurance coverage in place for Petitioners' claim. Also, Provider did not pay a Fund surcharge since 1989. Therefore, Provider could not participate in the Fund and was not eligible for Fund coverage for Petitioners' claim.

Following the close of pleadings, the parties proceeded with discovery. Pursuant to my order of March 20, 2008, the parties completed discovery in an expedited manner. Ultimately, Petitioners filed a request for admissions, interrogatories, and a ...


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