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Health insurance regulation - self-insured retention endorsements invalid until Department of Business Regulation promulgates rules.

Under Rhode Island law, all licensed medical professionals and providers are required to maintain at least $100,000 liability coverage per claim. (1) Further, within the confines of Rhode Island law, the director of the State of Rhode Island Department of Business Regulation (hereinafter "DBR") is authorized to promulgate rules and regulations that allow persons or entities with sufficient finances to self-insure. (2) In Peloquin v. Haven Health Center of Greenville, LLC, (3) the Supreme Court of Rhode Island considered whether self-insured retention endorsements in professional liability insurance policies are valid under state law. (4) The court held that the self-insured retention endorsement provision (hereinafter "the SIR Endorsement") in Haven Health Center of Greenville's (hereinafter "Haven Health") professional liability insurance policy was invalid because the DBR had not yet promulgated regulations allowing medical facilities to self-insure. (5)

On June 24, 2006, while a resident at Haven Health, Pearl Archambault (hereinafter "Ms. Archambault") was injected with an overdosed needle of morphine. (6) On that day a registered nurse and employee of Haven Health, mistakenly administered five milliliters of morphine instead of the five milligrams prescribed by physician's order. (7) Ms. Archambault passed away the following day as a result of the morphine overdose. (8)

The administratrix of Ms. Archambault's estate, Tracie Peloquin (hereinafter "Ms. Peloquin"), filed suit in Rhode Island Superior Court against Haven Health in December of 2006, alleging medical malpractice. (9) Haven Health filed for Chapter 11 bankruptcy about a year and a half after the overdose incident. (10) Haven Health was insured against professional liability claims by Columbia Casualty Company (hereinafter "Columbia"), however the policy contained a SIR Endorsement that required Haven Health to pay the first two-million dollars of any malpractice damages rendered against it. (11) Pursuant to Rhode Island law, which allows a plaintiff to implead a defendant's insurance company when the defendant has filed for bankruptcy, Ms. Peloquin added Columbia as a defendant to the lawsuit in 2009. (12)

Haven Health failed to respond to Ms. Peloquin's complaint, andas a result, the Superior Court entered a default judgment against Haven Health on November 20, 2009, awarding Ms. Peloquin a $364,421.63 judgment. (13) Ms. Peloquin then moved for summary judgment against Columbia based on her claim that the SIR Endorsement was void for want of public policy, and sought an additional $238,007.96 judgment against Columbia. (14) Columbia then filed and was granted a cross-motion for summary judgment, which Ms. Peloquin appealed to the Rhode Island Supreme Court. (15) The Rhode Island Supreme Court vacated the Superior Court's ruling holding the SIR Endorsement invalid because the director of DBR (hereinafter "the director") had not yet allowed for medical facilities and professionals to self-insure. (16)

In 1986, the Rhode Island General Assembly adopted R.I. GEN LAWS [section] 4214.1-2, an authorizing statute instructing the director to promulgate rules and regulations requiring all licensed medical professionals and providers to carry professional liability insurance. (17) The statute further provides that the director will decide the minimum amount of professional liability insurance coverage required, and that amount shall not be less than $100,000. (18) Lastly, the statute authorizes the director to allow licensed medical professionals and providers to self-insure as long as they possess sufficient financial resources. (19) To date, the director has neither promulgated rules and regulations prescribing the requirements for professionals and providers to self-insure, nor specified the requisite amount of minimum coverage. (20)

In ascertaining the meaning of the Rhode Island General Laws, the Rhode Island Supreme Court performs de novo review, and if the Court finds the statute unambiguous, it decides the case based on the statute's "plain and ordinary meaning." (21) Though the director has not yet promulgated rules and regulations governing professional liability self-insurance, the State of Rhode Island Division of Motor Vehicles and the State of Rhode Island Department of Labor and Training Self-Insurance Unit both have promulgated self-insurance regulations for their respective industries. (22) Both agencies have similarly determined that an applicant under its purview is prohibited from self-insuring until the applicant submits an application to the agency. (23) The agency then grants approval by determining that the applicant possesses sufficient financial resources. (24)

Self-insurance provisions are considered void as frustrating public policy in certain circumstances in Rhode Island as well as other jurisdictions. (25) In Ryan v. Knoller, the Supreme Court of Rhode Island held that excluding intoxication from automobile rental insurance coverage where a statutory minimum existed on such rentals was void because the policy no longer met the statutory minimum coverage. (26) In addition to finding that self-insurance fails to meet minimum coverage in some contexts, other jurisdictions have found self-insurance provisions to be void because self-insurance is the equivalent of having no insurance. (27)

In Peloquin v. Haren Health Center of Greenville, LLC, the Supreme Court of Rhode Island held that the SIR Endorsement in Haven Health's professional liability insurance policy was void and thus stricken from the policy'. (28) The court began by ruling out the need to decide whether the SIR Endorsement was void as against public policy because the statute was unambiguous, and therefore, the court was required to give the words in the statute their plain and ordinary' meaning. (29) In applying the statute's plain meaning, the court found the DBR would have to first promulgate the requisite framework for allowing self-insurance before a medical provider or facility would be allowed to self-insure. (30)

Further, the court treated the decisions of both the Division of Motor Vehicles and the Division of Labor and Training as particularly instructive. (31) Both agencies allowed self-insurance with the caveats that those wishing to self-insure first obtain the agency's permission, and second, prove themselves to be financially able to self-insure. (32) Observing Haven Health filed for bankruptcy less than a year and a half after Columbia issued its polio,', the court noted the unlikelihood that Haven Health was financially able to self-insure against the first two-million dollars in claims against it. (33) Applying the other agencies' precedents and the plain meaning of the statute, the court held that although Ms. Peloquin's judgment against Haven Health did not exceed the two-million dollar SIR Endorsement amount, she was nonetheless entitled to recover from Columbia. (34) The court held that SIR Endorsements are void until the DBR promulgates rules and regulations related to self-insurance by those with the financial ability to do so. (35)

In holding Columbia liable to the decedent's estate for Haven Health's negligence, the court provided compensation to Ms. Peloquin. (36) The court, however, unfairly pinned the blame on Columbia when it held that R.I. Gen. LAWS [section] 42-14.1-2 unambiguously requires medical facilities to obtain professional liability insurance and deemed malpractice self-insurance impermissible. (37) The court attempted to rationalize its plain meaning approach by offering examples of state administrative agencies that allow for self-insurance. (38) These examples do nothing to prove that the meaning of R.I. GEN. LAWS [section] 42-14.1-2 is unambiguous because they are solely illustrative of state agencies that have acted responsibly in promulgating rules to regulate self-insurance. (39)

Other reasonable interpretations can be reached based on the plain meaning of R.I. GEN. LAWS [section] 42-14.1-2. (40) For example, DBR has the responsibility to promulgate regulations before any insurance company is required to carry professional liability insurance or meet standards to allow self-insurance. (41) Therefore, the court's finding that applying the plain and ordinary meaning to the words in R.I. Gen. LAWS [section] 42-14.1-2 reached an unambiguous result is unconvincing. (42)

Rather than deciding that R.I. Gen. LAWS [section] 42-14.1-2 unambiguously deems malpractice self-insurance impermissible, the court could have found in favor of Ms. Peloquin by allowing her to directly file a complaint against Columbia under [section] 27-7-2.4; Columbia thus automatically would have been made to pay regardless of its agreement with its insured. (43) Self-insurance policies have commercial benefit and to disallow the intent of parties in a contract from taking effect is a matter of policy that is not for the court to decide. (44) Rather, creation of laws regarding public policy and having an impact on the economy should be left to the legislature. (45) This decision will result in costly future litigation because Columbia will likely sue Haven Health on a breach of contract theory if Haven Health becomes solvent. (46) In holding that the Endorsement invalid, the decision adds further uncertainty about whether a future court will find that Columbia is entitled to a judgment against Haven Health. (47)

The court's decision effectively carved out new law affecting professional liability insurers, health professionals, and medical facilities. (48) Following this decision, medical facilities in Rhode Island are now required to purchase malpractice insurance, though the required amount of coverage is unknown. (49) Additionally, as a result of the decision, medical facilities may no longer self-insure. (50) To avoid adverse future litigation, prudent insurance companies will likely remove SIR clauses in their contracts, which will mean charging their insured's higher premiums; facilities that do not earn' professional liability insurance will likely obtain it to avoid violating the new' interpretation of R.I. Gen. Laws 42.14.1-2. (51)

In Peloquin v. Haven Health, the Supreme Court of Rhode Island faced the question of whether SIR agreements in professional liability insurance policies are enforceable. (52) After finding that 42-14.1-2 was unambiguous, the court applied the statute's plain meaning, interpreting it as conferring on DBR the right to promulgate regulations in accordance with the statute, and barring malpractice-self-insurance until DBR expressly allows for it. (53) The General Assembly has taken the appropriate first step of passing 42-14.1-2. (54) DBR now has the responsibility to promulgate rules and regulations so that the commercial world can operate with legal certainty and the court can go back to applying law and solving disputes rather than filling the shoes of DBR by performing its administrative rulemaking duties. (55)

(1) R.I. GEN. LAWS [section] 42-14.1-2(a) (2007) (requiring medical professionals and providers maintain malpractice insurance covering a minimum of $100,000 per claim).

(2) Id. [section] 42-14.1-2(a) states, inter alia, "The director of the department of business regulation is further authorized to establish rules and regulations allowing persons or entities with sufficient financial resources to be self-insurers." Id. The DBR was created by the Rhode Island General Assembly in 1939 for the primary purpose of implementing state laws requiring the regulation and licensing of businesses designated under the agency's purview by the General Assembly. About the Department of Business Regulations, STATE OF R.I. DEPARTMENT OF Bus. REGULATION, http://www.dbr.state.ri.us/about (last visited Nov. 19, 2013). The director of DBR is appointed by the Governor. Id.

(3) 61 A.3d 419 (R.I. 2013).

(4) Id. at 426-29.

(5) Id. at 428. The court further held Ms. Peloquin's award of pre- and post-judgment interest is limited to the interest that may be calculated based on her $100,000 judgment and not on entire $256,881 judgment because the defendant's coverage under the policy is limited to $100,000 per claim. Id. at 431-32.

(6) Id. at 422-23. Haven Health was a nursing home in Greenville, Rhode Island. Haven Health Center of Greenville, AgingCare.com, http://www.agingcare.com/local/ Haven-Health-Center-Of-Greenville-Greenville-Nursing-Homes-RI (last visited Nov. 19, 2013). The facility primarily served elderly people with chronic health conditions who needed long-term care, and provided them with around the clock monitoring by nurses, and speedy access to physicians. Id.

(7) Peloquin, 61 A.3d at 422-23.

(8) Id.

(9) Id. at 422. Nurse Hardesty, the nurse responsible, was deposed and stipulated that she was negligent in administering the lethal dose of morphine to Ms. Archambault and that she was a full-time employee of Haven Health at that time. Id. at 423.

(10) Id. at 423-24. Additionally, two companies related to Haven Health, Haven Eldercare of New England, LLC and Haven Eldercare, LLC, also filed for Chapter 11 bankruptcy. Id. Although the bankruptcy court dismissed the cases pending against Haven Health, it did so without discharge. Peloquin, 61 A.3d at 424. When a company files for Chapter 11 Bankruptcy it must submit a reorganization plan to the bankruptcy court for the purpose of restructuring the company to maximize profit and pay off its debts. See Reorganisation Under the Bankruptcy Code, USCOURTS.GOV, http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/ Chapter11.aspx (last visited Nov. 19, 2013). If the court approves the plan, any existing litigation against the bankrupt is dismissed or automatically stayed during the bankruptcy period, which can last from a few months to several years. Id.

(11) Peloquin, 61 A.3d at 423. Columbia Insurance Company is a subsidiary of Continental Casualty Company and is a provider of casualty insurance. Company Overview of Columbia Casualty Company, Bloomberg Business Week, http://investing.businessweek.com/research/stocks/private/ snapshot.asp?privcapid=6513257 (last visited Nov. 19, 2013). Columbia is headquartered and incorporated in Illinois. Company Profile Page, MANTA, http://www.manta.eom/c/mm7zb4v/ columbia-casualty-company (last visited Nov. 19, 2013). The SIR Endorsement in Columbia's policy with Haven Health stated:
   [Columbia's] obligation to pay 'damages' and 'claim expenses' as a
   result of a 'claim' is in excess of the Self-Insured Retention.
   [Haven Health] [is] required to pay all 'damages' and 'claim
   expenses' up to the amount of the Self-Insured Retention listed
   herein. The Limits of Liability set forth on the Declarations Page
   are in excess of the Self-Insured Retention regardless of [Haven
   Health's] financial ability or inability to pay the Self-Insured
   Retention and in no event are we required to make any payments
   within [Haven Health's] Self-Insured Retention.


Peloquin, 61 A.3d at 423.

(12) R. I. Gen. Laws [section] 27-7-2.4 (1983) (allowing plaintiff to amend and add a defendant's insurer after the defendant filed for bankruptcy); Peloquin, 61 A.3d at 424. Section 27-7-2.4 does not preclude an insurer from suing its client to recoup its losses. See R. I. Gen. LAWS [section] 27-7-2.4 (1983). In the interest of judicial economy, and to avoid costly and time-consuming future litigation, courts will often aggregate claims. See Eunice A. Eichelberger, Annotation, Propriety of Ordering Consolidation under Rule 42(a) of Federal Rules of Civil Procedure in Actions Involving Securities, 83 A.L.R. Fed. 367, [section] 6(a) (1987).

(13) See Peloquin, 61 A.3d at 423. Under Rhode Island Superior Court Rules of Civil Procedure, courts enter a default judgment against a party when that party fails to answer the plaintiffs complaint in which the plaintiff names that party' as the defendant. SUPER. R. CIV. P. 55(a).

(14) Peloquin, 61 A.3d at 424.

(15) Id.

(16) R.I. GEN. Laws [section] 42-14.1-2 (2007); see Peloquin, 61 A.3d at 426, 428..

(17) See R. 1. Gen. Laws [section] 42-14.1-2(a) (2007). R. 1. Gen. Laws [section] 42-14.1-2(a) states:
   The director of business regulation shall promulgate rules and
   regulations requiring all licensed medical and dental professional
   and all licensed health care providers to be covered by
   professional liability insurance insuring the practitioner for
   claims of bodily injury' or death arising out of malpractice,
   professional error, or mistake. The director of the department of
   business regulation is hereby authorized to promulgate regulations
   establishing the minimum insurance coverage limits which shall be
   required; provided, however, that such limits shall not be less
   than one hundred thousand dollars ($100,000) for claims arising out
   of the same professional service and three hundred thousand dollars
   ($300,000) in the aggregate. The director of the department of
   business regulation is further authorized to establish rules and
   regulations allowing persons or entities with sufficient financial
   resources to be self-insurers.


Id.

(18) See id.

(19) Id.

(20) Supra note 16 and accompanying text.

(21) See Generation Realty, LLC v. Catanzaro, 21 A.3d 253, 258 (R.I. 2011) (explaining the Rhode Island Supreme Court interprets law de novo in making zoning law determinations); see also Mendes v. Factor, 41 A.3d 994, 1002 (R.I. 2012) (reviewing the statutory interpretation de novo). In Mendes, the court explained that under the plain meaning approach, the court still examines the sense and meaning it could fairly deduce from the context of the statute. Id. The reviewing court must consider all sections of a statute as a whole. See Generation Realty, 21 A.3d at 259. In interpreting statutory construction, the goal is to give the statute the effect which the General Assembly intended. Hanley v. State, 837 A.2d 707, 711 (R.I. 2003). In doing so, the court presumes that every word in the statute has a "useful purpose and ... some force and effect." LaPlante v. Honda N. Am., Inc., 697 A.2d 625, 629 (R.I. 1997). Further, the court will not "construe a statute to reach an absurd result." Generation Realty, 21 A.3d at 259 (quoting Kaya v. Partington, 681 A.2d 256, 261 (R.I. 1996)). If the court finds the language of a statute to be ambiguous the court may look to the canons of statutory interpretation and the legislative history to interpret the meaning of the ambiguity. See generally Chambers v. Ormiston, 935 A.2d 956, 960 (R.I. 2007).

(22) See Motor Vehicle Safety Responsibility Act R.I. Gen. LAWS [section] 31-33-9 (2010) (identifying the requirements for automobile self-insurance in R.I.); Workers Compensation--Insurance R.I. Gen. LAWS [section] 28-36-1 (2010) (determining the requirements for workers' compensation self-insurance in R.I.).

(23) See R.I. Gen. laws [section] 31-33-9 (2010); R.I. Gen. LAWS [section] 28-36-1 (a)(2)(i) (2010). To be able to self-insure automobile insurance, the Division of Motor Vehicles requires that the person obtain a certificate of self-insurance from the Division and that the Division only issue such a certificate if the person "possessed and will continue to be possessed of the ability to pay judgment obtained against the person." R.I. Gen. LAWS [section] 31-33-9(b) (2010). In order to self-insure, the person must possess a fleet exceeding twenty-five vehicles. Id. at [section] 31-33-9(a). Likewise, the Department of Labor and Training mandates that all employers required to obtain workers' compensation insurance and wishing to self-insure first apply for approval to self-insure, and as part of the application provide proof sufficient to the director that the employer is financially able to do so. R.I. Gen. LAWS [section] 28-36-1 (a)(2)(i) (2010). Employers are required to present to the director of labor and training as part of its application either security, indemnity, or bond to prove that it is capable of compensating its injured employees and their dependents. Id.

(24) See supra notes 22-23 and accompanying text (requiring those under R.I. agencies' regulation first obtain agency permission and be financially able to self-insure).

(25) Thomas v. Petrolane Gas Serv. Ltd. P'ship, 588 So.2d 711, 720 (La. Ct. App. 1991) (noting SIR endorsement in automobile insurance policy void as against public policy); Ryan v. Knoller, 695 A.2d 990, 992 (R.I. 1997) (determining intoxication exclusion provision violated public policy). See generally Commercial Union Ins. Co. v. Ins. Co. of N. Am., 273 S.E.2d 24, 27-28 (Ga. Ct. App. 1980) (holding person seeking to self-insure must first comply with statutory requirements). In interpreting an insurance policy, "[i]t is well established [the Rhode Island Supreme Court] applies the rules for construction of contracts." Mallane v. Holyoke Mut. Ins., 658 A.2d 18, 20 (R.I. 1995).

(26) See Ryan, 695 A.2d at 992.

(27) See Guerico v. Hertz Corp., 358 N.E.2d 261, 264 (N.Y. 1976) (requiring self-insuring lessor to pay judgment for lessee regardless of lessee's breach of contract). The N.Y. statute in Hertz allowed individuals to have self-insured automobile insurance, but only after submitting proof to the N.Y. Department of Motor Vehicles that the person was financially secure. Id. The court explained the legislature's rationale for this statute was responsive to its recognition that most car owners do not possess sufficient finances to cover all of the damage done to those whom are injured by their vehicles. Id. Parties affected by government interference with their ability to enter into a contract rely on the implied Constitutional protection of freedom to contract. GEORGE Blum ET AL., 16B Am. Jur. 2d Constitutional Law [section] 641 (2013). "Although the term 'freedom of contract' does not appear in the United States Constitution, and has been described as an abstract doctrine, it is nonetheless a part of the liberty protected by the Due Process Clause of the Fifth and Fourteenth Amendments." Id.

(28) Peloquin v. Haven Health, 61A.3d 419, 428 (R.I. 2013).

(29) Id. at 427.

(30) Id. The court noted when the language of a statute is clear, as is the case here, it will apply the plain and ordinary meaning of the words. See Generation Realty, LLC v. Catanzaro, 21 A.3d 253, 259 (R.I. 2011). The court read the plain meaning of the wording in the statute "authorized to establish rules and regulations allowing persons or entities with sufficient financial resources to be self-insurers" to mean that for a self-insurance endorsement in a malpractice insurance policy to stand the DBR must first designate the requisite framework for allowing such endorsements. Peloquin, 61 A.3d at 427.

(31) Id at 428.

(32) Id. at 426.

(33) Id at 428. The court discussed the possibility that even if the DBR had promulgated the framework for allowing self-insurance in the malpractice context, it was unlikely that Haven Health would have qualified because of its weak financial ability. Id.

(34) Id. at 428. Ms. Peloquin's judgment did not need to exceed the Columbia policy's two-million dollar SIR endorsement amount to be eligible for recovery given the invalidity of the endorsement under the statute. Peloquin, 61 A.3d at 428.

(35) Id at 428. The court also noted, persuasively in its conclusion, the characterization of self-insurance as "the antithesis of insurance." Id. Self-insurance, the court explained, left the burden to pay claims on the insured, and to make this a feasible scenario would require the insured to perform the type of underwriting usually left to insurers. Id. Haven Health's weak financial ability, filing for bankruptcy, and lack of evidence that it undertook any effort to assess its financial ability to pay malpractice judgments left no further need to delve into whether Haven Health should have been able to self-insure. Id.

(36) Peloquin, 61 A.3d at 432. The court held that the plaintiff was entitled to receive $100,000 under the policy, with prejudgment and post judgment interest calculated based on that amount. Id

(37) Id. at 428. Through its ruling, the court compensated Ms. Peloquin with the $100,000 judgment she sought. Id. at 428. See also supra notes 27-32 and accompanying text (discussing the court's interpretation of [section] 42-14.1-2). The court decided that [section] 42.14.1-2 is an authorizing statute in that it authorized the DBR to allow for self-insurance by promulgating regulations. Peloquin, 61 A.3d at 428. Contrarily, the court found that [section] 42-14.1-2 is not an authorizing statute in that it required, without any action from DBR, that all facilities maintain minimum coverage malpractice insurance, but did not state what that malpractice coverage is. Id. Based on its reading of [section] 42-14.1-2, the court appears to wants to have it both ways. Id. See also Michael F. Aylward, The Case of the Vanishing Self-Insured Retention, American Bar Association Insurance Coverage Litigation Case Notes (Feb. 27, 2013), http://apps.americanbar.org/litigation/committees/insurance/case notes.html. An additional factor that the court did not cite in its opinion but that could be rationally perceived was expressed in Michael Aylward's article, The Case of the Vanishing Self-Insured Retention: "While it was unfair of the court to pin the blame for this result on Columbia Casualty, the court may well have perceived the Company as an enabler in a scheme that failed to protect vulnerable members of the public." Id.

(38) See supra notes 22-23 and accompanying text (noting DMV and DLT require licensees wishing to self-insure first apply and prove sufficient financial capabilities).

(39) See R.I. Gen. LAWS [section] 31-33-9 (1952) (explaining the requirements for automobile self-insurance in R.L); R.I. Gen LAWS [section] 28-36-1 (1923) (describing the requirements for workers' compensation self-insurance in R.I.). These examples, which the court deems persuasive, are readily distinguishable in that they demonstrate agencies that were responsible in promulgating regulations, and that self-insurance is not void as against public policy. See supra notes 22-23 and accompanying text.

(40) See R.L Gen. LAWS [section] 42-14.1-2 (2007); infra note 41.

(41) See [section] 42-14.1-2 (2007) (authorizing the DBR to promulgate regulations for malpractice self-insurance). The language of [section] 42-14.1-2 could be read just as easily as an authorizing statute expressly permitting self-insurance. See id. [section] 42-14.1-2 states, "[t]he director of the department of business regulation is further authorized to establish rules and regulation allowing persons or entities with sufficient financial resources to be self-insurers." Id. Reading this statutory text in its plain meaning incontrovertibly expresses that malpractice self-insurance is not void for want of public policy, but rather is authorised by state law. See id.

(42) See Peloquin v. Haven Health, 61 A.3d 419, 427 (R.I. 2013) (explaining court's finding that [section] 42-13.1-2(a) is unambiguous).

(43) See Aylward, supra note 37(outlining applicable terms of the Endorsement). Section 27-7-2.4 states, in relevant part, "[a]ny person, having a claim because of damages of any kind caused by the tort of any other person, may file a complaint directly against the liability insurer of the alleged tortsfeasor." R.I. Gen. LAWS [section] 27-7-2.4 (2008). If the court had reached its verdict based on the reasoning that Ms. Peloquin could automatically proceed against Columbia regardless of any SIR agreement, Columbia would then have the unadulterated opportunity to file a separate action against Haven Health for breach of contract. See id. By ruling the SIR agreement void, the Court made a suit by Columbia to regain the $100,000 judgment from Haven Health difficult, as the courts are split on whether to enforce a contract clause that conflicts with a statute. See supra note 14 and accompanying text (explaining the split view on whether contracts deemed "illegal" may be enforced). The potential benefit of this alternative ruling is that Ms. Peloquin would have still been compensated for her loss, and Columbia's freedom to contract would be protected as the court would have offered zero interference with Columbia's ability to pursue a breach of contract claim against Haven Health. See BLUM, supra note 27.

(44) See Aylward, supra note 37(explaining the detrimental effects on providers and insurers if they are not permitted to include SIR endorsements in policies). Providers that self-insure enjoy benefits including lower costs and higher tax deductions, and the ability to exercise firmer control over their risk management. Id. The role of the court in interpreting a statute is to interpret it, with the "ultimate goal ... [giving] effect to the purpose of the act as intended by the legislature." See Hanley v. State, 837 A.2d 707, 711 (R.I. 2003).

(45) See Hanley, 837 A.2d at 712 (holding court's role is not to create policy, but to interpret policy intended by legislature). See also supra note 44 (demonstrating providers benefit from self-insuring).

(46) See Aylward, supra note 37 (predicting costly future litigation between Columbia and Haven Health resulting from this decision). The SIR agreement in Haven Health's policy agreed that Haven would be responsible for paying the first two-million dollars in claims. See Peloquin v. Haven Health, 61 A.3d 419, 423 (R.I. 2013). Although the court entered a $100,000 judgment against Columbia in favor of Ms. Peloquin, Columbia will surely seek to recover its loss from Haven Health in accordance with the terms of its policy. See id. at 432; Aylward, supra note 37 (analyzing the means for recovery Columbia may have from Haven Health). This attempt at recovery will result in a second time consuming and costly suit that will further bog down the parties and the courts. See id. (explaining Columbia will sue Haven Health in an attempt to recoup its loss).

(47) See supra notes 33-35 and accompanying text (describing that courts are hesitant to enforce clauses deemed impermissible).

(48) See supra note 29 and accompanying text. The court has done the job of DBR by utilizing the legislature's authorizing statute and promulgating a rule that all professionals and facilities under the purview of [section] 42-14.1-2 are required to obtain minimum malpractice coverage, and that no one may self-insure, unless they are financially able to do so. See supra note 32. The ambiguity of the laws created by the court are apparent, and this is why the legislature intended to leave this role up to the DBR when it passed [section] 42-14.1-2, intending DBR to exercise its expertise and promulgate appropriate rules in accordance with the statute. See Peloquin, 61 A.3d at 429 (noting the court will not determine whether $100,000 per-claim minimum is mandatory). See also id. at 426 (recognizing that [section] 42-14.1-2 authorizes DBR to promulgate self-insurance rules in the malpractice context).

(49) See supra note 32 and accompanying text (discussing a need for minimum malpractice insurance); see also Peloquin 61 A.3d at 430 (noting that the court did not determine the minimum amount of required coverage); see also R.I. Gen. LAWS [section] 42-14.1-2 (2012).

(50) See supra note 16 and accompanying text (explaining the Court's holding that providers may not self-insure).

(51) See supra note 35 and accompanying text (explaining medical facilities and providers may not self-insure until DBR promulgates rules); Aylward, supra note 37 (determining one of the benefits of self-insuring is reduced costs).

(52) See Peloquin, 61 A.3d at 425.

(53) R.I. Gen. Laws [section] 42-14.1-2; Peloquin, 61 A.3d at 427.

(54) See R.I. GEN. Laws [section] 42-14.1-2 (2012) (discussing the establishment of a department of business regulation, its director and the department's functions).

(55) See supra notes 22, 23, 33-41 and accompanying text (describing the court's role as not making policy but interpreting the intent of the legislature).

Benjamin Gagliardi, J.D. Candidate, Suffolk University Law School, 2014; B.A., University of Massachusetts, Amherst, 2011. Mr. Gagliardi may be contacted at benjamingagliardi@gmail.com.
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Publication:Journal of Health & Biomedical Law
Article Type:Case note
Date:Jan 1, 2014
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