Medical Mutual Liability Insurance Society v. Goldstein

GREENE, Judge. This matter arises from a declaratory judgment action filed by Barrett Goldstein, M.D. against Property and Casualty Insurance Guaranty Corporation (“PCIGC”), 1 and Medical Mutual Liability Society of Maryland (“Medical Mutual”). Dr. Goldstein, an orthopedic surgeon, sought a determination of whether PCIGC or Medical Mutual was obligated to provide a defense and indemnification for him in a contribution action filed by Montague Blundon, III, M.D. The Circuit Court for Montgomery County held that both companies were obligated to provide a defense and to indemnify Dr. Goldstein. PCIGC and Medical Mutual appealed.

Prior to consideration of the matter in the Court of Special Appeals we granted certiorari on our own motion. See Medical Mutual Liability Society of Maryland v. Goldstein, 385 Md. 161 , 867 A.2d 1062 (2005). ³⁰² PCIGC contends that the trial court erred in failing to apply the bar date restriction included in the definition of “covered claim” in PCIGC’s operating statute, Md.Code (1995, 2003 Repl.Vol.) § 9-301(d)(l) of the Insurance Article (“INS”). 2 In the alternative, it argues that the trial court erred in determining that PCIGC and Medical Mutual have a co-extensive duty to defend and indemnify Dr. Goldstein. According to PCIGC, the trial court’s interpretation violated INS § 9-310, 3 which requires Dr. Goldstein to exhaust coverage by another insurer before pursuing coverage by PCIGC. Medical Mutual argues that the trial court erred in declaring it responsible for the defense and indemnification because its policy explicitly excludes coverage for claims “first made” prior to the policy period.

It also argues that Dr. Goldstein should be estopped from taking a position that is inconsistent with the theory, which he successfully argued against PCIGC, that the contribution claim is “the same injury” asserted in the medical malpractice action because it is an “additional claim made for damages resulting from the same injury.” We hold that, based on the plain language of the statute, Dr. Goldstein’s claim for indemnification is not a “covered claim” because it was not presented to PCIGC prior to the absolute and final bar date as required by INS § 9-301(d)(l)(ii). Timely notice to PCIGC of an actual claim is not timely notice of all ³⁰³ potential claims arising out of the same event. Accordingly, PCIGC is not obligated to provide a defense and to indemnify Dr. Goldstein in the contribution action. Additionally, we hold that, based on the language of the Medical Mutual policy, Medical Mutual is not required to provide a defense or indemnification to Dr. Goldstein in the contribution action.

Although the contribution action was “first made” during the coverage period, January 1, 2002, to January 1, 2003, the first claim against Dr. Goldstein arising out of the injury to Ms. Taylor was made prior to the coverage period. The policy specifically states that “[a]ll ‘claims’ for damages arising out of any one ‘incident’ will be deemed to have been made at the time the first of those ‘claims’ is first made against any insured.” Therefore, the claim is not covered by the policy. Facts The contribution action arose from a medical malpractice suit brought by Shirley Taylor against Doctors Goldstein and Blundon on January 6, 1995. The malpractice suit, HCA No. 95-006, arose from a surgical procedure performed in 1992 on Ms. Taylor’s hip by Dr. Blundon.

Dr. Goldstein assisted in the surgery. On February 20, 1997, the Health Claims Arbitration Panel entered an award against Dr. Blundon in the amount of $503,189.64, and entered an award in favor of Dr. Goldstein. On November 20, 1997, the Circuit Court for Montgomery County confirmed the Panel’s determination. Dr. Blundon appealed.

We affirmed the Circuit Court’s ruling. See Blundon v. Taylor, 364 Md. 1 , 770 A.2d 658 (2001). No appeal was taken by either Dr. Blundon or Ms. Taylor regarding the Panel’s conclusion in favor of Dr. Goldstein. On April 16, 2002, Dr. Blundon filed the underlying contribution action, HCA No. 2002-177, seeking $312,450 plus cost and interest from Dr. Goldstein.

The contribution action has been stayed pending the outcome of this litigation. 4 ³⁰⁴ After receiving notice of the contribution action, Dr. Gold-stein notified Medical Mutual and PCIGC. He sought a defense and indemnification from both companies pursuant to his respective insurance policies. PCIGC denied coverage on the basis that the claim was filed two-and-a-half years after the final bar date established in the PIE Mutual insolvency proceeding and, therefore, the claim was not a “covered claim” within the meaning of INS § 9-301(d)(l). Medical Mutual denied coverage on the basis that the policy Dr. Goldstein maintained with the company was a “claims first made” policy which limits coverage to “claims which are first made against any insured during the policy period for ‘incidents’ occurring after the Retroactive Date specified in the Declaration.” The policy further states that “all claims for damages arising out of any one ‘incident’ -will be deemed to have been made at the time the first of those ‘claims’ is first made against any insured.” Medical Mutual took the position that because the underlying medical malpractice suit was the first claim made against an insurer for damages arising out of the treatment of Ms. Taylor, the claim was “first made” in 1995 and, therefore, not covered by its policy.

In March of 2003, Dr. Goldstein filed a declaratory judgment action against PCIGC and Medical Mutual to determine whether either company was obligated to provide him with a defense and indemnification in the contribution action. PCIGC filed a motion to dismiss or in the alternative a motion for summary judgment on the same grounds that it originally denied the claim. On June 2, 2003, the Circuit Court for Montgomery County denied PCIGC’s motion on the basis that the language of the PIE Mutual policy, 5 which defines the contribution action as a claim pursuant to the policy, “does ³⁰⁵ have some relevance.” 6 PCIGC filed a motion for reconsideration and Dr. Goldstein filed a motion for summary judgment. The court began the hearing by noting: To me, when I read it, the claim itself clearly falls within the definition of a covered claim under the PIE [Mutual] policy.

The issue is does the statute which defines covered claim, change that when it refers to the time it has to be filed and the order with the absolute drop dead bar date. After argument by both parties the court granted Dr. Gold-stein’s motion, holding: The aspect of this claim that we’re talking about which, in essence, is the cross claim not filed earlier, is only under the PIE [Mutual] policy because it is an extension of the original claim that was made. And, since the earlier one ³⁰⁶ was timely, this being the extension of it, I’m finding that it is as well timely and not covered by the bar date. PCIGC indicated that they would appeal the decision.

In May of 2004, Dr. Goldstein filed a motion for summary judgment against Medical Mutual. Medical Mutual opposed the motion and filed a cross-motion for summary judgment on the “claim first made” basis discussed above. Medical Mutual also argued that Dr. Goldstein should be estopped from taking a position that is inconsistent with the theory that he successfully argued against PCIGC, that the contribution claim is “the same injury” asserted in the medical malpractice action because it is an “additional claim made for damages resulting from the same injury.” On July 6, 2004, a hearing was held regarding the motions. The court held: Well, it is truly a fascinating issue and I think the art of writing insurance policies is trying to figure out all the permutations and combinations of things that could happen in the future and plan for them.

And here we have two different policies with slightly different language in the policies and I guess the question is can you walk that fine line where potentially you could have coverage by both. And looking at the language in the old, in the PIE [Mutual] policy, any additional claim made for damages resulting in the same injuries shall be considered a claim hereunder, which doesn’t seem to have the same parameters on it and it seems to me that there is kind of a narrow alley between those respective coverage definitions that would allow for coverage of the Med Mutual policy, without being inconsistent, which it does, at first glance, seem to be but it seems to me that under both of those languages, that coverage could be found without one contradicting the other. So for those reasons, I am going to find that summary judgment is appropriate in favor of Dr. Goldstein. I do find that there is no genuine dispute as to material fact and that the fair and appropriate reading of the policy would provide that this is a claim made within the coverage period. ³⁰⁷ The appeals from both declaratory judgment actions were consolidated into the present action.

Standard of Review We recently discussed our standard of review for a trial court’s grant of summary judgment in the case of Rockwood Cas. Ins. Co. v. Uninsured Employers’ Fund, 385 Md. 99 , 867 A.2d 1026 (2005). We said: Under Md. Rule 2-501(e), summary judgment may be granted if “the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law.” When making a summary judgment decision, the trial court must npt determine any disputed facts.

Rather, considering the undisputed facts, the court must decide if the moving party is entitled to judgment as a matter of law. Williams v. Mayor and City Council of Baltimore, 359 Md. 101, 114 , 753 A.2d 41, 48 (2000) (internal citations omitted). We review the grant of summary judgment de novo. Walk v. Hartford Cas.

Ins. Co., 382 Md. 1, 14 , 852 A.2d 98, 105 (2004). Whether the circuit court properly granted summary judgment is a question of law. Id.

We must decide if the trial court’s decision was legally correct. Id. Rockwood, 385 Md. at 106 , 867 A.2d at 1029-30. The Claim Against PCIGC At the time that the medical malpractice suit arose, Dr. Goldstein was insured by PIE Mutual. 7 On March 23, 1998, an insolvency proceeding involving PIE Mutual was instituted in the Court of Common Pleas in Franklin County, Ohio.

Subsequently, PIE Mutual was determined to be insolvent and the Franklin County court executed an order of liquidation. ³⁰⁸ On February 17, 1999, the Franklin County court entered an order stating, in relevánt part: 2. The Bar Date in the [PIE Mutual] liquidation proceeding be, and the same hereby is, EXTENDED to September 23, 1999. September 23, 1999 is ESTABLISHED to be the Absolute Final Bar date in this liquidation proceeding. 4. The Liquidator’s determination not to exercise discretion to accept, for any reason, any late filed Proofs of Claim, under R.C. § 3903.35(B) and (D), be, and the same hereby is, APPROVED. 6.

All Contingent Claims and all Future Claims, as defined in the Notice, will be forever barred and foreclosed after September 23,1999. The Notice defined “Contingent” and “Future” Claims as, claims which have not yet fully developed and ripened into actual litigated claims. A claim is a Contingent Claim unless an actual lawsuit has been filed as to the claim or unless the claimant has made a formal written, demand for payment on the claim, which demand specifically describes the circumstances of the incident in sufficient detail to both (a) describe a matured, legitimate claim and (b) support a complaint based solely on the information contained in the demand.... “Future Claims” are claims which are presently unknown to the creditors, which arise from and after September 23,1999. PCIGC is the successor to PIE Mutual in Maryland.

It is governed by subtitle 3 of Title 9 of the Insurance Article. INS §§ 9-301 through 9-316. It is a private, nonprofit, nonstock corporation. INS § 9-304(a)(2).

The purpose of the subtitle is “to provide a mechanism for the prompt payment of covered claims under certain policies and to avoid financial loss to residents of the State who are claimants or policyholders of an insolvent insurer; and to provide for the assessment of the cost of payments of covered claims and protection among insurers.” INS § 9-302. Insurance companies doing business in Maryland are required as a condition of their ³⁰⁹ authority to transact business in the State to be a member of PCIGC. INS § 9-304(b). Member insurance companies pay an annual assessment to cover the expenses of PCIGC incurred as a result of an insurance company’s insolvency.

INS § 9-306(d). PCIGC is only obligated to pay “covered claims.” INS § 9-306; 8 see also Maryland, Motor Truck, 386 Md. at 95, 871 A.2d at 594. The term “covered claim” is defined in INS § 9-301(d). It provides, in relevant part, that a “covered claim” is: (1) [A]n insolvent insurer’s unpaid obligation, including an unearned premium: (i) that: 1.

A .... arises out of a policy of the insolvent insurer issued to a resident or payable to a resident on behalf of an insured of the insolvent insurer; (ii) that is presented on or before the last date fixed for the filing of claims in the domiciliary delinquency proceeding as a claim to the corporation or to the receiver in the State; (iii) that: ... was incurred or existed before, on, or within 30 days after the determination of insolvency; and (iv) that arises out of a policy or surety bond of the insolvent insurer issued for a kind of insurance to which the subtitle applies. INS § 9 — 301(d)(1). Accordingly, PCIGC is obligated to provide Dr. Goldstein with a defense in the contribution action provided the claim is an unpaid obligation of PIE Mutual that satisfies all four requirements. PCIGC does not challenge Dr. Goldstein’s position that the contribution action is an unpaid obligation of PIE Mutual.

The PIE Mutual policy provides, in relevant part: If any claim is first made during the policy period alleging injury to an individual that would be covered by this policy, any additional claim made for damages resulting from the ³¹⁰ same injury shall be considered a claim hereunder. A claim shall be considered to be first made when the Company first receives written notice of the claim or occurrence. By the terms of the policy, the contribution claim is an “additional claim made for damages resulting from” the injury to Ms. Taylor, and, consequently, is considered a claim under the policy. Likewise, PCIGC does not challenge that the requirements (i), (iii), and (iv) are met.

What PCIGC does dispute is requirement (ii) — that a claim must be presented to PCIGC on or before the last date fixed for the filing of claims in the domiciliary proceeding. The “last date fixed for the filing of claims” or “the Absolute Final Bar Date” in the liquidation of PIE Mutual, as established by the Court of Common Pleas for Franklin County, was September 23,1999. The contribution action was filed April 16, 2002, approximately two-and-a-half years after the “last date fixed for the filing of claims.” Apparently, Dr. Goldstein had no notice of the contribution suit until it was filed. Although the record does not indicate precisely when Dr. Goldstein notified PCIGC of the lawsuit, beyond stating that he did notify them after he received notice of the action, he clearly notified them after September 23,1999. “The cardinal rule of statutory interpretation is to ascertain and effectuate the intention of the legislature.” Oaks v. Connors, 339 Md. 24, 35 , 660 A.2d 423, 429 (1995). “The first step in determining legislative intent is to look at the statutory language and ‘if the words of the statute, construed according to their common and everyday meaning, are clear and unambiguous and express a plain meaning, we will give effect to the statute as written.’ ” Id.

(quoting Jones v. State, 336 Md. 255, 261 , 647 A.2d 1204, 1204 (1994)). Based on the plain language of the statute, the contribution claim is not a “covered claim” because it was not “presented [to PCIGC] on or before the last date fixed for the filing of claims.” Despite the plain language of the statute, Dr. Goldstein contends that in determining what qualifies as a “covered claim” within the meaning of the statute, the court should look ³¹¹ to the underlying insurance policy. His argument is that because the contribution claim would be a claim under the policy, it is a “covered claim” within the meaning of the statute. In support of this argument, he relies on the case of Igwilo v. Prop. & Cas.

Ins. Guar. Corp., 131 Md.App. 629 , 750 A.2d 646 (2000). The question in Igivilo was how many “covered claims” existed.

The court quoted from INS § 9-301(d) for the definition of “covered claim” stating that it is “an insolvent insurer’s unpaid obligation . .. that ... arises out of a policy of the insolvent insurer.” Igwilo, 131 Md.App. at 637 , 750 A.2d at 650 . The court looked to the language of the policy and concluded that there existed two “covered claims” that were subject to the $299,900 statutory cap per “covered claim.” Igwilo, 131 Md.App. at 645 , 750 A.2d at 655 . Dr. Goldstein’s reliance on Igwilo is misplaced. As we noted in the present case, the definition of “covered claim” in INS § 9 — 301(d)(1) encompasses more than the section quoted in the Court of Special Appeals opinion.

It is a four-part definition that places limitations on what qualifies as a “covered claim” pursuant to the statute. The intermediate appellate court in Igwilo aptly noted that “what constitutes a ‘claim’ under the policy does not resolve the issue of what constitutes a ‘covered claim’ under the statute.” Igwilo, 131 Md.App. at 641 , 750 A.2d at 652 . By definition, not all claims recognizable under the insurance policy are “covered claims” pursuant to the statute. Only those “unpaid obligations” of the insolvent insurer that satisfy all four parts of the definition are “covered claims” pursuant to the statute.

If we adopted Dr. Goldstein’s position that the sole question in determining what qualifies as a “covered claim” is whether the claim would be covered by the underlying policy, then sections (d)(ii)-(iv) of INS § 9-301 would be rendered meaningless. Such a result is contrary to our case law. See Mayor & Council of Rockville v. Rylyns Enterprises, Inc., 372 Md. 514, 550 , 814 A.2d 469, 490 (2002) (stating that “[i]f reasonably possible, a statute is to be read so that no word, phrase, clause, or sentence is rendered surplus-age or meaningless”). ³¹² Dr. Goldstein further argues that because the PIE Mutual policy states that “any additional claim made for damages resulting from the same injury shall be considered a claim hereunder,” presentment of the medical malpractice claim “comprehended not only the immediate claim set forth in the [medical malpractice] complaint, but also any additional claims arising from the same injury.” The argument