Brandi Billeaudeau v. Opelousas General Hospital Authority

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

17-894

BRANDI BILLEAUDEAU ET AL.
VERSUS

OPELOUSAS GENERAL HOSPITAL AUTHORITY, ET AL.

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APPEAL FROM THE
TWENTY-SEVENTH JUDICIAL DISTRICT COURT
PARISH OF ST. LANDRY, NO. 11-C-5112-D C/W 13-C-0097
HONORABLE D. JASON MECHE, DISTRICT JUDGE

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VAN H. KYZAR
JUDGE

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Court composed of Phyllis M. Keaty, John E. Conery, and Van H. Kyzar, Judges.

REVERSED; RENDERED; AND REMANDED.

Kara Hadican Samuels

Tiffany A. Morales

Kara Hardican Samuels & Associates, LLC

4004 Canal Street

New Orleans, LA 70119

(504) 558-9478

COUNSEL FOR PLAINTIFFS/APPELLANTS:
Veronica Billeaudeau, individually and as curatrix of Brandi
Billeaudeau
Joseph Billeaudeau

Jennifer L. Thornton

Christian S. Chaney

Stanley, Reuter, Ross, Thornton & Alford, LLC

909 Poydras Street, Suite 2500

New Orleans, LA 70112

(504) 523-1580

COUNSEL FOR PLAINTIFFS/APPELLANTS:
Veronica Billeaudeau, individually and as curatrix of Brandi
Billeaudeau,
Joseph Billeaudeau

Joseph L. McReynolds

J. Jerry Glas

Karen P. Holland

Deutsch Kerrigan, L.L.P.

755 Magazine Street

New Orleans, LA 70130

(504) 581-5141

COUNSEL FOR DEFENDANT/APPELLANT:
Opelousas General Hospital Authority

George P. Hebbler, Jr.

Frances Irene McGinnis

Hebbler & Giordano, LLC

3501 N. Causeway Boulevard, Suite 400

Metairie, LA 70002

(504) 833-8007

COUNSEL FOR DEFENDANT/APPELLANT:
Nautilus Insurance Company

Nicholas Gachassin, III

Gary J. Delahoussaye

Brandon M. Rhodes

Gachassin Law Firm

P. O. Box 80369

Lafayette, LA 70598-0369

(337) 235-4576

COUNSEL FOR DEFENDANT/APPELLANT:
Opelousas General Hospital Authority

George D. Fagan
Anton L. Hasenkampf
Leake & Andersson, LLP
1100 Poydras Street, Suite 1700
New Orleans, LA 70163
(504) 585-7500
COUNSEL FOR DEFENDANT/APPELLEE:
National Union Fire Insurance Company of Pittsburgh, PA

William H. Parker, III

Jacob E. Favaron

Allen & Gooch

2000 Kaliste Saloom Rd., Suite 400

Lafayette, LA 70508

(337) 291-1000

COUNSEL FOR DEFENDANT/APPELLEE:
Louisiana Patients’ Compensaton Fund (Opelousas General Hospital)
Louisiana Patients’ Compensation Fund (Dr. K. Skirlis-Zavala)

J. Gregory Vidrine

Mahtook & LaFleur

P. O. Box 617

Ville Platte, LA 70586

(337) 363-6211

COUNSEL FOR DEFENDANT/APPELLEE:
Opelousas General Hospital

Alexander T. Reinboth

Louisiana Department of Justice, Civil

P. O. Box 94005

Baton Rouge, LA 70804

(225) 326-6000

COUNSEL FOR DEFENDANT/APPELLEE:
State of Louisiana

KYZAR, Judge.

The plaintiffs, Veronica Billeaudeau, individually and as curatrix of Brandi
Billeaudeau, and Joseph Billeaudeau, and the defendants, Opelousas General
Hospital Authority, d/b/a Opelousas General Hospital, and Nautilus Insurance
Company, appeal the granting of a partial motion for summary judgment, which
dismissed National Union Fire Insurance Company of Pittsburg, PA as a party to
the Billeaudeaus’ negligent credentialing claim against OGH. For the reasons
assigned, we reverse, render, and remand for further proceedings.

DISCUSSION OF THE RECORD

This is the second of three appeals before us involving the same parties. The
facts of the case were set forth in detail by this court in Billeaudeau v. Opelousas
General Hospital Authority, 15-1034 (La.App. 3 Cir. 4/6/16), 189 So.3d 561, writ
granted, 16-846 (La. 6/28/16), 192 So.3d 781, wherein we held that the
Billeaudeaus’ negligent credentialing claim sounded in general negligence as
opposed to a claim for medical malpractice, which was required to be pursued
under the Louisiana Medical Malpractice Act (MMA), La.R.S. 40:1231.1, et seq.
The supreme court reviewed the case and affirmed. Billeaudeau v. Opelousas Gen.
Hosp. Auth., 16-846 (La. 10/19/16), 218 So.3d 513.

As we stated in the first appeal before us, Billeaudeau v. Opelousas General
Hospital Authority, 17-893 (La.App. 3 Cir. // ), _ So.3d _, the Billeaudeaus
initially filed a claim against Opelousas General Hospital Authority, d/b/a
Opelousas General Hospital (OGH) and its emergency department physician, Dr.
Kondilo Skirlis-Zavala (Dr. Zavala), under the MMA for serious injuries allegedly
sustained by the Billeaudeaus’ daughter, Brandi, while being treated at OGH on
June 20, 2010. In their original petition, filed on January 14, 2013, the

Billeaudeaus alleged:

Defendant, Opelousas General Hospital, is liable unto
Petitioners because Ms. Billeaudeau’s injuries and damages, which
will be specified hereinafter, were proximately and legally caused by
the fault, including negligence, of Opelousas General Hospital .. .
including the following negligent acts of omission and commission,
among others, which may be shown during the trial:

e. Negligent credentialing of Dr. Zavala.

On March 27, 2015, the Billeaudeaus filed a motion for partial summary
judgment, seeking a ruling by the trial court that their negligent credentialing claim
was not subject to the MMA. Following a hearing. the trial court granted judgment
in favor of the Billeaudeaus, declaring that the negligent credentialing claim
sounded in negligence and was outside the scope of the MMA. Judgment was
granted in this matter on July 2, 2015. Thereafter, the Billeaudeaus amended their
petition to add a claim in tort for negligent credentialing against OGH and its
general liability insurers, National Union Fire Insurance Company of Pittsburg, PA
(National Union) and Nautilus Insurance Company (Nautilus) under the Louisiana
Direct Action Statute.’ On July 8, 2015, OGH provided notice to National Union
of the lawsuit for the first time.

National Union issued a policy of insurance to OGH, No. 01-701-24-67,
with effective dates of October 19, 2014 through October 19, 2015. The policy
included four coverage sections: Directors and Officers (D&O), Employment
Practices Liability (EPL), Fiduciary Liability (FLI), and Crime. The National
Union policy is a claims-made and reported policy, and the notice provided on the
declarations page of the policy states: “COVERAGE WITHIN THIS POLICY
IS GENERALLY LIMITED TO LOSS FROM CLAIMS FIRST MADE

AGAINST ENSUREDS DURING THE POLICY PERIOD AND REPORTED

" La.R.S. 22:1269.

TO THE INSURER AS THE POLICY REQUIRES.” Further, the D&O
Coverage Section of the policy provides: “This policy shall pay on behalf of the
Organization Loss arising from a Claim first made against the Organization
during the Policy Period or the Discovery Period (if applicable) and reported to
the Insurer pursuant to the terms of this policy for any actual or alleged Wrongful
Act of the Organization.” The EPL and FLI Coverage Sections include language
similar to that found in the D&O Coverage Section.

The term “Claim” is defined in the D&O Coverage Section as:

(1) a written demand for monetary, non-monetary or injunctive
relief (including any request to toll or waive any statute of
limitations); or

(2) a civil, criminal, regulatory or administrative proceeding for
monetary, non-monetary or injunctive relief which is
commenced by:

(i) service of a complaint or similar pleading;

(ii) return of an indictment, information or similar
document (in the case of a criminal proceeding); or

(iti) receipt or filing of a notice of charges.
Concerning the notice requirement, the National Union policy, in its general
terms and conditions under Clause 7, as amended in Endorsement Number
Fourteen, further specified:

The Insureds shall, as a condition precedent to the obligations of the
Insurer under this policy, give written notice to the Insurer of any
Claim made against an Insured or any Crisis Management Event
(as defined in the D&O Coverage Section) as soon as practicable after
the Organization’s Risk Manager or General Counsel (or equivalent
position) first becomes aware of the Claim; or (ii) the Crisis
Management Event commences, but in al} events a Claim must be
reported no later than either:

(1) anytime during the Policy Period or during the
Discovery Period (if applicable); or

(2) within ninety (90) days after the end of the Policy
Period or the Discovery Period (if applicable).

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The policy also has a bodily injury coverage exclusion. The term “Bodily
Injury” is defined within the General Terms and Conditions section of the policy as
“physical injury, sickness or disease (other than emotional distress or mental
anguish), including death resulting therefrom.” The Bodily Injury exclusion
provided that coverage is excluded for any payment for loss incurred in connection
with a claim “alleging, arising out of, based upon, attributable to or in any way
involving, directly or indirectly, Bodily Injury or Property Damage; provided,
however, that with respect to the FLI Coverage Section only, this exclusion shall
not apply to Defense Costs incurred in the defense of a Claim alleging a Breach
of Fiduciary Duty.”

The National Union policy also provided an exclusion for damages for a
claim “alleging, arising out of, based upon or attributable to the facts alleged, or to
the same or Related Wrongful Act alleged or contained in an Claim which has
been reported, or in any circumstances of which notice has been given, under any
policy of which this policy is a renewal or replacement or which it may succeed in
time.” The policy defines “Related Wrongful Act” as “a Wrongful Act which is
the same, related or continuous, or Wrongful Act which arises from a common
nucleus of facts. Claims can allege Related Wrongful Acts regardless of whether
such Claims involve the same or different claimants, Insureds or legal causes of
action.”

On April 3, 2017, National Union filed a motion for summary judgment
alleging that its policy did not provide coverage for the negligent credentialing
claims. It claimed that the policy of insurance issued to OGH by National Union
did not provide coverage for losses sustained as the result of the Billeaudeaus’
negligent credentialing claim against OGH, as it was not put on notice of the claim

in a timely manner as required by the policy language. National Union

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additionally urged that the policy excluded coverage for this incident under the
“Bodily Injury” exclusion and that it excluded coverage for any claim covered by
and noticed under an insurance policy that its policy succeeded, National Union’s
motion was opposed by the Billeaudeaus, OGH, and Nautilus. Following a May 5,
2017 hearing, the trial court granted National Union’s motion as per written
reasons for judgment on July 13, 2017, for the following reasons (footnote
omitted):

Coverage under the National Union policy requires “a Claim
first made against such Individual Insured during the Policy Period
or the Discovery Period (if applicable) and reported to the Insurer...”

The plain terms of insurance policies must be enforced. See La. C.C.
art. 2046; Gorman v. City of Opelousas, 2013-1734 (La. 7/1/14, 15),
148 So.3d 888, 898. As argued by National Union in its various
briefings to the court, the event that triggered policy coverage
occurred prior to the applicable policy period. The claim was “first
made” well in advance of the applicable policy period. Therefore,
National Union’s policy provisions on the making and reporting of
claims requires the exclusion of coverage.
Formal judgment was signed on July 26, 2017, dismissing National Union from the
suit. The Billeaudeaus, OGH, and Nautilus have all appealed.
Each of the appellants raised assignments of error on appeal, which can be
summarized by that assigned by the Billeaudeaus, as follows:

The trial court erred in concluding that the negligent
credentialing claim was first made against OGH prior to the policy
period during which it was reported to National Union, as OGH had
no possible exposure outside of the LMMA and _ negligent
credentialing did not exist as a stand-alone cause of action until the
trial court so held in July 2015, which was during the applicable
policy period of October 2014 - October 2015.

OPINION
The standard of appellate review applicable to summary judgment is well
settled. La.Code Civ.P. art. 966. “Appellate review of the granting of a motion for

summary judgment is de novo, using the identical criteria that govern the trial

court’s consideration of whether summary judgment is appropriate.” Smitko v.

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Gulf South Shrimp, Inc., 11-2566, p. 7 (La. 7/2/12), 94 So.3d 750, 755; see
Billeaudeau, _So.3d _.

As we stated in the first appeal, the summary judgment procedure is
particularly appropriate for determining certain insurance coverage issues.
Sensebe v. Canal Indem. Co., 10-703 (La. 1/28/11), 58 So.3d 441. The principles
of insurance contract interpretation were reviewed by this court in Burns v.
Couvillion, 10-763, pp. 8-9 (La.App. 3 Cir. 12/8/10), 53 So.3d 540, 546 (alteration
in original}, wherein we stated:

“An insurance policy is an agreement between the parties and
should be interpreted by using ordinary contract principles.” Orazio
v. Henderson, 01-28, p. 2 (La.App. 3 Cir. 7/11/01), 790 So.2d 754,
755 (quoting Ledbetter v. Concord Gen. Corp., 95-809, p. 3
({La.1/6/96), 665 So.2d 1166, 1169, amended on other grounds, 95-
809 (La.4/18/96), 671 So.2d 915). Additionally, “[t]he contract has
the effect of law for the parties. La.Civ.Code art. 1983.” /d When
the language in an insurance contract is clear and explicit, no further
interpretation may be made in search of the party’s intent. Hill v.
Shelter Mut. Ins. Co., 05-1783, 05-1818 (La.7/10/06), 935 So.2d 691.
A court should not strain to find ambiguity where none exists. Hebert
v. Webre, 08-60 (La.5/21/08), 982 So.2d 770.

Moreover, the principles pertaining to the interpretation of insurance policy
exclusions were reviewed by the supreme court in Ledbetter v. Concord General
Corp., 95-809, p. 4 (La. 1/6/96), 665 So.2d 1166, 1169, amended, 95-809 (La.
4/18/96), 671 So.2d 915, as follows:

Exclusionary provisions in insurance contracts are strictly
construed against the insurer, and any ambiguity is construed in favor
of the insured. Garcia v. St. Bernard Parish School Board, 576 So.2d
975, 976 (La.1991). However, the rule of strict construction does not
“authorize a perversion of language, or the exercise of inventive
powers for the purpose of creating an ambiguity where none exists.”
Muse v. Metropolitan Life Ins. Co., 193 La. 605, 192 So. 72, 75
(1939). Insurance companies have the right to limit coverage in any
manner they desire, so Jong as the limitations do not conflict with
statutory provisions or public policy. Reynolds v. Select Properties,
Ltd., 93-1480 (La. 4/11/94); 634 So.2d 1180, 1183.

Here, the Billeaudeaus, OGH, and Nautilus all argue that the trial court erred
in finding that OGH’s notice of the “negligent credentialing” claim to National
Union was untimely and, thus, excluded from coverage by the terms of its policy,
even though OGH notified National Union immediately following the trial court’s
ruling that the negligent credentialing claim sounded in negligence. National
Union argues, and the trial court accepted, that regardless of the characterization of
the claim of “negligent credentialing” as one in negligence or one of medical
malpractice, the claim was made and arose as a result of the June 20, 2010 incident
at the hospital. The “negligent credentialing” allegation was indeed first asserted
as part and parcel of the issues presented by the Billeaudeaus to the medical review
panel formed under the guidelines of the MMA, as follows:

Opelousas General Hospital is responsible for the actions of

Nurse Richardson, and thus, bears fault in this matter. In addition, the

hospital failed to ensure that Dr. Zavala was qualified to work alone in

the emergency department at the South Campus (negligent

credentialing), and failed to supervise Dr. Zavala. In fact, it has been

established that although the hospital had a written stroke protocol and

a written transfer protocol, Dr. Zavala had never seen either one. If

not for this litigation, Dr. Zavala might not ever have seen the

hospital’s written protocols, a fact which is unforgivable.

The Billeaudeaus additionally alleged “negligence credentialing” in their
original petition against OGH under the MMA. It was then, according to National
Union, that OGH had the obligation to put all applicable insurance companies on
notice of the claim. In its motion for summary judgment, National Union argues
that coverage under its policy is not provided for three reasons:

[T]he National Union Policy does not provide coverage to Opelousas

General for the claims alleged in Plaintiffs’ lawsuit for three reasons.

First, the National Union Policy is a “claims-made” policy, whereby

coverage is effective only if the claim is first made and reported

during the applicable policy period, i.e., October 19, 2014 to October
19, 2015. The “claim” now asserted by Plaintiff, however, was
indisputably first made no later than January 2013 when this action

was filed—years before the inception of the National Union Policy.
Second, there is no coverage under the National Union Policy for the

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independent reason that the National Union Policy expressly excludes
coverage for any claim “alleging, arising out of, based upon,
attributable to or in any way involving” bodily injury, which
indisputably includes Plaintiffs’ lawsuit. Finally, the National Union
Policy expressly excludes coverage for any claim “alleging, arising
out of, based upon [or] attributable to” the circumstances forming
basis of any claim reported. under any insurance policy the National
Union Policy “may succeed in time.” Here, however, Opelousas
General reported a claim to Nautilus Insurance Company in June
2011, under a Nautilus policy with a policy period of November 1,
2010 to November 1, 2011, based on the same facts which now form
the basis of this action.

We disagree with Nationa! Union’s arguments, finding that it was error for
the trial court to conclude that OGH’s notice to National Union, of the “negligent
credentialing” claim arising as a negligence claim and first recognized by the trial
court as such in July 2015, by this court in April 2016, and finally by the supreme
court in October 2016, was untimely and, thus, excluded from coverage.

The policy in question is without a doubt a “claims-made and reported”
policy. Claims-made policies differ from “occurrence” policies. In Anderson v.
Ichinose, 98-2157, pp. 5-6 (La. 9/8/99), 760 So.2d 302, 305, the court quoted a
“seminal statement” on the subject of claims-made versus occurrence policies from
Sol Kroll, The Professional Liability Policy “Claims Made,” 13 Forum 842, 843
(1978), as follows:

With the development of a more complex society, it became more
reasonable, particularly with respect to the activities of professionals,
to insure against the making of claims, rather than the happening of
occurrences, and “claims made” insurance developed to meet a need
for professionals to insure against the making of a claim as the insured
event, rather than having to struggle with traditional concepts and
difficulties inherent in determining whether the “event” insured
against was the commission of an act, error or omission or the date of
discovery thereof or the date of injury caused thereby.

The major distinction between the “occurrence” policy and the
“claims made” policy constitutes the difference between the peril
insured. In the “occurrence” policy, the peril insured is the
“occurrence” itself. Once the “occurrence” takes place, coverage
attaches even though the claim may not be made for some time
thereafter. While in the “claims made” policy, it is the making of the

8

claim which is the event and peril being insured and, subject to policy
language, regardless of when the occurrence took place.

Further, in Regions Bank v. Kountz, 05-1106, p. 6 (La.App. 3 Cir. 5/31/06),
931 So.2d 506, 511 (citation omitted), this court stated as follows in differentiating
claims-made policies:

Pure claims-made policies shift to the insured only the risk of claims

incurred but not made, whereas claims-made-and-reported policies

shift the risks both of claims incurred but not made and of claims

made but not reported. The purpose of a claims-made-and-reported

policy is to alleviate problems in determining when a claim was made

or whether an insured shouid have known a claim was going to be

made.

In this case, the “occurrence” was the event at the hospital on June 20, 2010,
the treatment rendered to Brandi Billeaudeau. However, in National Union’s
claims-made and reported policy, it is the claim first made against OGH and
reported to National Union during the policy period which is the “event and peril
being insured{.]” Anderson, 760 So.2d at 305. Under the facts at issue, we find
that the claim, which was the “negligent credentialing” claim sounding in general
negligence, was not cognizable by OGH until the trial court’s July 2, 2015 ruling
holding as such.

Prior to that time, it was unreasonable to assert that OGH should have
known that the negligent credentialing claim was being made under general
negligence as opposed to a medical malpractice claim as the claim was considered
covered under the auspices of the MMA. Within eight days of learning that the
negligent credentialing claim was indeed a negligence claim, OGH reported it to
Nationa! Union. Thus, the claim sounding in general negligence against OGH was

first made and then reported to National Union within the time provided for in

National Union’s policy. As such, the trial court erred in determining otherwise.

To have required OGH to notify National Union (or any insurance company
that issued a like policy) of the claim as early as July 2010, or even after the initial
medical malpractice suit was filed, would have been a vain and useless act on its
part. The National Union policy did not cover claims for medical malpractice.”
“Negligent credentialing,” prior to the trial courts’ ruling, as affirmed by this court
and the supreme court, was considered a medical malpractice claim. National
Union, or any similarly situated insurer, surely would have asserted this exclusion
and been summarily dismissed from the litigation. The claim, sounding in
negligence, was not cognizable until July 2, 2015 at the earliest, and arguably not
until the final ruling of the supreme court. Thus, OGH could not have known that
the policy of insurance issued by National Union might indeed provide coverage
for the claim now recognized in general negligence as opposed to a claim covered
under the MMA. While the occurrence took place with the June 20, 2010
treatment rendered to Brandi at OGH, the actual claim in general negligence,
outside the scope of the MMA, did not arise until July 2, 2015. Indeed,
recognizing a separate cause of action, although related to the previous occurrence,
has been addressed by the supreme court in Everything on Wheels Subaru, Inc. v.
Subaru South, Inc., 616 $o0.2d 1234, 1238, n.5 (La.1993), wherein the court stated:

The task of defining cause of action in various contexts has
perplexed Louisiana courts for many years. The task is relatively
simple when the separate causes of action arise out of entirely
separate facts. However, the task is substantially more difficult when

the possibly separate causes of action arise out of overlapping sets of

operative facts. These difficult questions must be addressed on a case-
by-case basis.

” Exclusion (j), contained in Endorsement Sixteen of National Union’s policy, provides
that it will not be liable for any payment for loss in connection with a claim “alleging, arising out
of, based upon or attributable to the Insureds performance or rendering of or failure to perform
or render medical or other professional services or treatments for others|.]”

10

This is such a case. The “cause of action” giving rise to OGH’s requirement
to notify National Union, its insurer who potentially had exposure to coverage of
the claim, did not appear until, at the latest, when the supreme court put to rest the
res nova issue of whether negligent credentialing was a distinct action outside of
medical malpractice and coverage under the MMA. Although the operative facts
were the same as presented in the petition, those facts were not recognized as
giving rise to a legally separate cause of action in negligence until the Billeaudeaus
presented the issue and the trial court weighed in. As noted by Justice Knoll in
Billeaudeau, 218 So.3d at 527, “the tortious conduct alleged herein, 7.e., OGH’s
negligent administrative decision making, is separate and distinct from the medical
decisions and conduct directly related and integral to the rendering of medical care
and treatment by the health care providers to the patient in this case, ie., the
medical malpractice covered by and to subject to the LMMA.” Here, OGH’s
negligent credentialing of Dr. Zavala predated the facts giving rise to the
Billeaudeaus’ medical malpractice claim, but the claim against OGH for that
negligent credentialing as a pure negligence claim was not made against OGH until
July 2015, and was properly reported to National Union shortly thereafter. Thus,
we reverse the decision of the trial court granting summary judgment in favor of
National Union on this ground.

However, that does not end our inquiry. The motion for summary judgment
on behalf of National Union also asserted that the policy excluded coverage for

ect

damages arising from “bodily injury” and for any claim “‘alleging, arising out of,
based upon [or] attributable to’ the circumstances forming the basis of any claim
reported under any insurance policy” that its policy “‘may succeed in time.””

National Union argues that there is no coverage under its policy for the

independent reason that the policy expressly excludes coverage for any claim

1]

“alleging, arising out of, based upon, attributable to or in any way involving’
bodily injury, which indisputably includes the Billeaudeaus’ suit.’”” However, the
term “Bodily Injury” is defined within the General Terms and Conditions section
of the policy as “physical injury, sickness or disease (other than emotional distress
or mental anguish), including death resulting therefrom.” The claim made on
behalf of Brandi arising from the treatment she received at OGH includes damages
for mental anguish and emotional distress. Furthermore, Veronica and Joseph
Billeaudeau allege that they suffered damages pursuant to La.Civ.Code art. 2315.6,
which allows recovery of damages for mental anguish and emotional distress.

The Billeaudeaus and Nautilus further argue that the language of
Endorsement Number Fourteen is ambiguous such that the “Bodily Injury”
exclusion should be read out of National Union’s policy. Endorsement Number
Fourteen contains the following heading:

NOT-FOR-PROFIT RISK PROTECTOR® AMENDATORY
ENDORSEMENT
(NO BI/PD EXCLUSION AMENDMENT)
(D&L, EPL, & FLI COVERAGE SECTIONS)

The Billeaudeaus and Nautilus argue that the heading of this endorsement,
“(NO BI/PD EXCLUSION AMENDMENT),” could be read to mean that the
“BI” (bodily injury) or “PD” (property damage) exclusion has been removed from
the General Terms and Conditions of National Union’s policy, such that ambiguity
exists in the policy and coverage should be allowed for bodily injury. However, if
Endorsement Number Fourteen is read in conjunction with Endorsement Number
Sixteen, it is obvious that “NO BI/PD EXCLUSION AMENDMENT” simply

means that Endorsement Number Fourteen does not contain an amendment to the

Bodily Injury or Property Damage exclusions contained in the General Terms and

i

Conditions of National Union’s policy. The heading of Endorsement Number
Sixteen provides as follows:
NOT-FOR-PROFIT HEALTH CARE ORGANIZATION
AMENDATORY ENDORSEMENT
(ANTITRUST EXCLUSION DELETED)
(D&O AND EPL COVERAGES)

Thus, if National Union intended to delete the Bodily Injury exclusion from its
policy, it would have stated so as it did the Antitrust Exclusion in Endorsement
Number Sixteen.

A plain reading of the Bodily Injury exclusion in National Union’s policy
results in a finding that it does not cover damages for physical injuries or illness,
including death, but it does provide coverage for mental anguish and emotional
distress arising from the actions of OGH and its employees. The granting of
summary judgment in favor of National Union based solely on this exclusion is
improper. However, we do find that there should be judgment in favor of National
Union in part, finding that there is no coverage provided under the terms of the
policy for damages for the physical injuries allegedly sustained by Brandi.

In its final argument, National Union asserts that because OGH reported a
claim to Nautilus in June 2011, under a Nautilus insurance policy with a policy
period of November 1, 2010 to November |, 2011, based on the same facts which
now form the basis of this action, its policy excludes coverage. In its appellate
brief, National Union alleges (footnotes omitted), “It is undisputed that OGH
reported a Claim to Nautilus on June 28, 2011, after it received notice that a
Medical Review Panel had been convened to review Brandi’s June 20, 2010

treatment at OGH. This Claim was reported under a Nautilus policy with a policy

period of November 1, 2010 to November 1, 2011.”

LS

National Union’s argument assumes, however, that its policy is a successor
policy to Policy Number PFP 1000052_P-3, which was issued by Nautilus to
OGH, with an effective date of November 1, 2010 to November 1, 2011.
However, because no proof was offered that National Union’s policy succeeded
Nautilus’ policy, summary judgment on this issue is inappropriate. The Nautilus
policy that National Union referred to was a professional liability or medical
malpractice insurance policy, which was designed to cover the loss, if any, caused
by medical malpractice. Certainly, OGH notified Nautilus when it was sued for
malpractice, including the negligent credentialing claim, which at the time was
covered as a malpractice claim. The National Union policy is admittedly a
Directors and Officers (D&O), Employment Practices Liability (EPL), Fiduciary
Liability (FLI), and Crime Liability insurance policy, which specifically excludes
coverage for medical malpractice. Nautilus’ and National Union’s policies provide
different coverages for different purposes, and while National Union’s policy was
issued after Nautilus’ professional liability policy, it was not a policy that was
meant to or in fact designed to “succeed in time” the Nautilus policy. Thus, the
reporting of the claim to Nautilus does not relieve National Union from its
coverage responsibility, if any, under its policy. If that was its intent, we conclude
that the language is at best ambiguous and must be interpreted against the insurer.

We, thus, conclude that National Union’s policy was not a successor policy
to the policy issued by Nautilus. Nautilus’ policy did not and was not intended to
cover the same liability as National Union’s policy. Accordingly, we conclude that
National Union is not entitled to summary judgment based on the prior reporting

provision exclusion.

i4

DISPOSITION

For the reasons stated herein, we reverse the decision of the trial court
granting summary judgment in favor of National Union Insurance Company of
Pittsburg, PA; we render partial summary judgment in favor of National Union
Insurance Company of Pittsburg, PA, finding that the policy of insurance in
question excludes coverage for actual bodily injury damages, but does provide
coverage for mental anguish and emotional distress damages, and we remand the
matter for proceedings consistent herewith. Costs of this appeal are assessed to
National Union Insurance Company of Pittsburg, PA.

REVERSED; RENDERED; AND REMANDED.

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