MHA Insurance loses bid to deny physician and malpractice victim umbrella coverage
Mark Gifford lost bladder control and much of the use of his leg after neurosurgery performed by Dr. Christopher Abood of Lansing Neurosurgery Associates, PC. Abood had malpractice liability coverage in the amount of $200,000.00, with a one million dollar umbrella that excluded coverage for any incident which ocurred at Ingham Regional Medical Center. Gifford's surgery occurred at Ingham, however, the only viable malpractice claim he was able to pursue against Abood was based on the doctor's fialure to see Gifford the morning after surgery when his wife called to report his deteriorating condition. We have been told before that physicians should "never let the sun go down" on a potential cauda equina spinal cord dysfunction, because if the nerve is not decompressed within 24 hours, the damages become more severe and are more likely to be permanent. That appears to have been the basis of Gifford's surviving negligence claim, since even knowing Gifford's symptoms, Abood's office did not see him immediately and merely offered to move up his 30-day follow-up visit. He ended up permanently disabled.
When MHA refused to provide coverage, Abood's attorneys negotiated a settlement with Gifford under which a judgment for the full amount of the insurance coverage was entered, but Gifford promised to collect it only from the insurer and not from Abood's personal assets. Gifford's lawyers then sought to collect the judgment by garnisheeing Abood's MHA policy.
The Court held that there was no basis for MHA's claim that since the original surgery was performed at Ingham Regional Medical Center, Abood also did not have coverage for negligence that occurred in Abood's office after-the-fact. The insurance policy language simply was not that broad: the exlusion was for "professional medical services rendered at Inham..."
The Court also held that since MHA improperly denied coverage for an incident that should have been covered under the policy, Abood was within his rights to resolve the claim and to seek indemnity from MHA. The insurer was "bound" by the outcome, even though it had not participated in the action, because it had improperly refused to honor its contractual obligation to defend Abood.