CMC v. Executive Risk CV-03-35-B 05/04/04
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Catholic Medical Center, et. a l ,
Civil No. 03-35-B
Opinion No.
2004 DNH 077
Executive Risk Indemnity, Inc,
ORDER OF CERTIFICATION
Catholic Medical Center ("CMC") and other plaintiffs have
brought a declaratory judgment action against their former
insurer. Executive Risk Indemnity, Inc. ("Executive Risk"),
seeking coverage under a "claims-made" liability insurance
policy. The policy in guestion contains a provision that permits
an insured to obtain coverage for a claim that is made after the
policy expires if the insured gives the insurer written notice of
the potential claim while the policy is in effect. Relying on
this provision, CMC sent notices of seven potential claims via
Federal Express to Executive Risk's agent on the last day that
the policy was in effect. The notices were not received by
Executive Risk until the next day, approximately nine hours after
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the policy had lapsed. The primary issue that this case presents
is whether Executive Risk properly refused to cover the potential
claims because it did not receive notices describing the acts
giving rise to the claims while the policy was in effect.
Because this issue turns on two important and unresolved
guestions of New Hampshire law, I certify both guestions to the
New Hampshire Supreme Court.
I. BACKGROUND
CMC purchased a claims-made liability policy from Executive
Risk that covered CMC and its affiliated organizations and
physicians. The policy was effective from 12:01 a.m. August 1,
2001 to 12:01 a.m. August 1, 2002. As a claims-made policy, the
Executive Risk policy covers claims brought against the insured
during the policy period. The policy also obligates Executive
Risk to cover claims that are made after the policy expires if
CMC gives Executive Risk written notice of the potential claims
while the policy is in effect. The relevant policy provision
states:
(2) If during the Policy Period the Insured first
becomes aware of any Wrongful Act or Occurrence that
may subseguently give rise to a Claim under
INSURING AGREEMENTS (A) or (C) and:
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(a) gives the Underwriter written notice of such
Wrongful Act or Occurrence with full particulars as
soon as practicable thereafter but in any event before
the Expiration Date or earlier cancellation date of
this Policy; and
(b) reguests coverage under INSURING AGREEMENTS (A) or
(C) of this Policy for any Claim subseguently arising
from such Wrongful Act or Occurrence which is reported
as soon as practicable after such Claim is made;
then any Claim . . . arising out of such Wrongful Act
or Occurrence shall be treated as if it had been
first made during the Policy Period.
(Pis.' Mem. Supp. Summ. J. Ex. 2, Ap p . 30).
On the afternoon of July 31, 2002, CMC's risk manager,
Kathleen Mackinnon, sent seven notices of potential claims via
Federal Express Priority Overnight to Chubb & Son, claims manager
for Executive Risk. Federal Express delivered the notices as
expected at 9:03 a.m. on August 1, 2002, approximately nine hours
after the policy had expired. On August 16, 2002, Barbara
Tyrrell, on behalf of Executive Risk, denied coverage of all
seven potential claims because notices were received after the
expiration of the policy. Two of the potential claims have since
matured into actual claims. CMC reported the first1 of these
1 In May 2003, patient John Donahue sued CMC, Catholic
Medical Center Physicians Practice Association, Inc. ("CMCPPA"),
and Drs. Charles F. Carrier and Miguel Juardo. CMCPPA and the
doctors were later added as plaintiffs in the instant litigation.
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claims to Executive Risk but was denied coverage on the grounds
of late notice.2
II. CERTIFIED QUESTIONS
The parties have filed cross-motions for summary judgment
addressing the notice issue. Plaintiffs contend that the notices
were timely because CMC sent them via Federal Express while the
policies were in effect. Alternatively, they argue that they are
entitled to coverage even if the notices were untimely because
CMC substantially complied with the notice reguirement and
Executive Risk did not suffer prejudice as a result of the late
notice. Executive Risk argues that the notices were late because
its agent did not receive them until after the policy had
expired. It also contends that New Hampshire law does not excuse
a failure to comply with a notice reguirement in a claims-made
policy regardless of whether the insured substantially complied
with the reguirement or the late notice adversely affected the
2 ProSelect, the carrier that replaced Executive Risk, has
also denied coverage for all seven potential claims citing the
understanding of the parties that coverage would not exist for
potential claims known to CMC before the coverage commenced and
because notice of these potential claims had been reported to
another carrier.
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insurer. These arguments present unresolved questions of New
Hampshire law that are likely to recur unless they are
authoritatively resolved by the New Hampshire Supreme Court.
Thus, I certify the following questions of law pursuant to N.H.
Supreme Court Rule 34:
(1) Does an insured comply with a provision in a
claims-made liability insurance policy
requiring the insured to give written notice
of acts that may result in future claims
before the policy expires if the insured
sends written notice via Federal Express
while the policy is in effect but the notice
is not received until after the policy
expires ?
(2) If the answer to question 1 is no, is the
insured nevertheless entitled to coverage if
the insured substantially complies with the
notice requirement and the insurer does not
suffer prejudice as a result of the late
notice?
SO ORDERED.
Paul Barbadoro
Chief Judge
May 4, 2 004
cc: Jonathan Constine, Esq.
Patrick Donovan, Esq.
Mark Mallory, Esq.
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