Insurer Claims $25 Million Verdict Was First Notice of Lawsuit
It turns out that Charleston Area Medical Center is facing two lawsuits over insurance coverage for Dr. R. E. Hamrick, Jr.’s $25 – now $10 – million verdict, not one, as I wrote yesterday.
In May, Employers Reinsurance Corporation now known as Westport Insurance Corporation filed a declaratory judgment action in federal court against CAMC and its captive insurer, Vandalia Insurance Company, to determine whether it owes any duty to CAMC. Employers Reinsurance Corporation v. Charleston Area Medical Center, Inc., Civil Action No. 2:08-CV-0303.
ERC reinsures CAMC's $25 million policy with Vandalia, and its policy with Vandalia requires that it be given “prompt, written notice” of any loss, occurrence, claim, event, etc. that has a “reasonable possibility of resulting in a claim for indemnity hereunder.”
ERC claims that CAMC did not notify it of Hamrick’s lawsuit until February 11, 2008, which was four days after the jury returned its verdict for $25 million. ERC argues that it did not receive the notice required by its policy with Vandalia and that it is entitled to a declaratory judgment that it has no obligation to indemnify Vandalia for any payments made to CAMC nor any obligation to directly indemnify CAMC.
Neither defendant has responded to the complaint yet. Because this action was filed before Executive Risk Indemnity’s lawsuit and involves the same subject matter, the two suits are likely to be consolidated before United States District Court Judge Joseph R. Goodwin.
