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Dr. sues insurer for failure to settle within policy limits.

CASE ON POINT: Mutual Assurance Inc. v. Schulte, No. 1050092 (04/27/2007) So.2d -AL

ISSUE: Is your professional liability insurance company looking after your best interest if you are sued for medical malpractice Improper, unskilled, or negligent treatment of a patient by a physician, dentist, nurse, pharmacist, or other health care professional. ? That was the issue in this Alabama case in which an insurance company could have settled a medical malpractice case against a physician and his group within the $2 million limits of their policies. When a jury returned a verdict against the physician and his group for more than $4.5 million, the physician and his group sued their insurance company for both negligent negligent adj., adv. careless in not fulfilling responsibility. (See: negligence)  and bad faith refusal to settle the case.

CASE FACTS: In April 1990, Woodrow Smith sued Dr. William Schulte and Pulmonary Associates of Mobile, P.A., Dr. Schulte's medical group, alleging that Dr. Schulte committed malpractice malpractice, failure to provide professional services with the skill usually exhibited by responsible and careful members of the profession, resulting in injury, loss, or damage to the party contracting those services.  while treating Smith's wife, Annie Jo, and that she died as a result of the malpractice. At the time of the alleged malpractice, Dr. Schulte and his group were each covered by medical malpractice insurance policies issued by Mutual Assurance, Inc. (MAI MAI Mail (File Name Extension)
MAI Multilateral Agreement on Investment
MAI Maius (Latin: May)
MAI Ministerul Administratiei si Internelor (Romanian) 
). Each policy provided up to $1,000,000 in coverage per incident. Thus, MAI's total exposure in regard to the claim was $2,000,000. According to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 Dr. Schulte and Pulmonary Associates, Smith made multiple offers before trial to settle his claim for the limits in the policies. MAI, however, declined to settle. MAI's decision not to settle the medical malpractice death case for $2,000,000. After a jury returned a verdict in favor of Smith against Dr. Schulte and Pulmonary Associates for $4,500,000, Dr. Schulte and Pulmonary Associates moved the trial court to reduce the award, arguing both that it was excessive and that it should be reduced. Following a hearing, the trial court ruled that the damage award was not excessive. However, it reduced the amount awarded to $1,276,873. Both parties appealed the trial court's judgment to the Supreme Court of Alabama, which held that the $4,500,000 verdict was excessive and ordered a remittitur, which reduced the damages awarded to $2,500,000. MAI paid the $2,000,000 it was liable for under its policies and loaned Dr. Schulte and Pulmonary Associates and additional $1,150,000 to pay the remainder of the judgment and accumulated post judgment interest. Subsequently, Dr. Schulte and Pulmonary Associates sued MAI alleging that MAI could have settled the claim within the limits of the policies for $2,000,000 but failed to do so due to negligence and/or bad faith. Dr. Schulte and Pulmonary Associates maintained that MAI was also liable for that part of the judgment that exceeded the limits of their policies. The trial court denied MAI's motion for summary judgment motion for summary judgment n. a written request for a judgment in the moving party's favor before a lawsuit goes to trial and based on recorded (testimony outside court) affidavits (or declarations under penalty of perjury), depositions, admissions of fact, answers . MAI appealed.

COURT'S OPINION: The Supreme Court of Alabama affirmed the judgment of the trial court, which denied MAI's motion for summary judgment. The court held, inter alia [Latin, Among other things.] A phrase used in Pleading to designate that a particular statute set out therein is only a part of the statute that is relevant to the facts of the lawsuit and not the entire statute. , that there was an issue of fact, which only a jury could decide. That was whether MAI's decision not to settle the case within the policy limits, as it had the opportunity to do, constituted negligence or bad faith.

LEGAL COMMENTARY: MAI made no differentiation between the plaintiffs' negligent-failure-to-settle and bad-faith-failure-to-settle claims. Instead, MAI implicitly attempted to combine the claims and argue that summary judgment was appropriate as to both claims. MAI's position was that it had a lawful basis for refusing to settle the underlying medical malpractice claim (i.e. reliance on an Alabama law placing a cap on damages). However, the court recognized that although the existence of a lawful basis for MAI's refusal to settle could be a defense to Dr. Schulte's and Pulmonary Associates' allegations of bad faith failure to settle, it was not a complete defense against their negligent failure to settle claim. The court noted that to defend against that claim, MAI would be required to establish that a reasonably prudent insurer would have relied upon that same lawful basis to refuse to settle the claim. Editor's Note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat.

Trained by D.
: Physicians and their practice groups should be keenly aware that they may be best served by having their own personal defense counsel participate in the oversight of all medical malpractice cases brought against them. Many such cases will be well within policy limits and. as a practical matter, not require active participation by personal counsel. However, physicians are best served by having their personal counsel copied on all negotiations as well as all documents filed in court. In that way, personal counsel can make an informed decision whether he or she should be participating in the defense of their client. This is significant in an), case in which damages can potentially be in excess of policy limits. Further, the participation of personal counsel affords personal counsel the opportunity to urge settlement within policy limits and/ or allows him or her to put the carrier on notice of the consequences of refusing to settle within policy limits, whether negligently or in bad faith. It is amazing a·maze  
v. a·mazed, a·maz·ing, a·maz·es
1. To affect with great wonder; astonish. See Synonyms at surprise.

2. Obsolete To bewilder; perplex.

 how much impact a certified letter certified letter n (US) → lettre recommandée

certified letter (US) nEinschreibebrief m

certified letter n
 from a physician's personal attorney, putting a recalcitrant recalcitrant adjective Poorly responsive to therapy  insurer on notice that if the case is not settled within policy limits, despite a medical malpractice victim's willingness to do so, can have on an insurance company that is reluctant to settle the case for an amount within policy limits.

Meet the Editor & Publisher: A. David Tammelleo, JD, is a nationally recognized authority on health care law. Practicing law for over 40 years, he concentrates in health care law with the Rhode Island Rhode Island, island, United States
Rhode Island, island, 15 mi (24 km) long and 5 mi (8 km) wide, S R.I., at the entrance to Narragansett Bay. It is the largest island in the state, with steep cliffs and excellent beaches.
 firm of A. David Tammelleo & Associates. He has presented seminars on medical, nursing and hospital law throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . In addition to his writings as Editor of Medical Law's, Nursing Law's & Hospital Law's Regan Reports, his legal articles have been published in the most prestigious health law journals. A prolific writer, his thousands of articles, as well as his achievements as an attorney and lecturer, have won him recognition in Martindale-Hubbell's Bar Register of Preeminent pre·em·i·nent or pre-em·i·nent  
Superior to or notable above all others; outstanding. See Synonyms at dominant, noted.

[Middle English, from Latin prae
 Lawyers, Marquis Who's Who Who’s Who

biographical dictionary of notable living people. [Am. Hist.: Hart, 922]

See : Fame
 in American Law, Who's Who in America and Who's Who in the World.
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Title Annotation:Medical Law Case on Point
Author:Tammelleo, A. David
Publication:Medical Law's Regan Report
Date:Jun 1, 2007
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