Opinion
No. 3487–14.
09-21-2017
HEALTHCARE PROFESSIONALS INSURANCE COMPANY, Plaintiff, v. Michael A. PARENTIS, M.D., Donald Schultz, Katherine Schultz and Medical Liability Mutual Insurance Company, Defendants.
McNamee, Lochner, Titus & Williams, P.C. (Christopher Massaroni, of counsel), Albany, attorneys for plaintiff. Phillips Lytle LLP (William J. Brennan, Kenneth A. Manning and Amanda L. Lowe, of counsel), Buffalo, attorneys for defendants Michael A. Parentis, M.D., Donald Schultz and Katherine Schultz. Rivkin Radler, LLP (Michael P. Versichelli and David Richman, of counsel), Uniondale, attorneys for defendant Medical Liability Mutual Insurance Company.
McNamee, Lochner, Titus & Williams, P.C. (Christopher Massaroni, of counsel), Albany, attorneys for plaintiff.
Phillips Lytle LLP (William J. Brennan, Kenneth A. Manning and Amanda L. Lowe, of counsel), Buffalo, attorneys for defendants Michael A. Parentis, M.D., Donald Schultz and Katherine Schultz.
Rivkin Radler, LLP (Michael P. Versichelli and David Richman, of counsel), Uniondale, attorneys for defendant Medical Liability Mutual Insurance Company.
RICHARD M. PLATKIN, J.
Plaintiff Healthcare Professionals Insurance Company ("HPIC") commenced this action in July 2014, seeking a judgment declaring that it acted in good faith and in accordance with its obligations to defendant Michael A. Parentis, M.D. as his excess insurance carrier. The underlying action, a medical malpractice suit brought by defendants Donald and Katherine Schultz, resulted in a jury verdict against Dr. Parentis in the sum of $8,647,438, which was well in excess of the $2.3 million combined limits of his primary and excess insurance. Dr. Parentis counterclaims against HPIC and cross-claims against his primary insurer, defendant Medical Liability Mutual Insurance Company ("MLMIC"), alleging that both carriers acted in bad faith in failing or refusing to settle the underlying action within the limits of his available insurance.
Pre-trial discovery is complete, a trial-term note of issue has been filed, and the case has been assigned a day certain for jury trial of October 30, 2017. HPIC now moves for summary judgment on its cause of action for declaratory judgment and for the dismissal of Dr. Parentis's counterclaim. MLMIC moves separately for summary judgment dismissing Dr. Parentis's cross claim and so much of HPIC's amended complaint that alleges that MLMIC breached any duty owed to HPIC. Dr. Parentis and the Schultzes oppose the motions.
BACKGROUND
In October 2004, Donald Schultz ("Schultz") broke his left ankle while at work. He received treatment for the injury from Andrew Stoeckl, M.D., a board-certified orthopedic surgeon. After continuing to experience pain and instability in his left ankle, Schultz transferred his care in November 2005 to Dr. Parentis, a board-certified orthopedic surgeon who specializes in foot and ankle issues. Over the course of the next three and a half years, Dr. Parentis performed as many as 20 surgeries and procedures on Schultz, culminating in a below-the-knee amputation of Schultz's left leg in July 2009. Schultz thereafter transferred his care to a third orthopedic surgeon, who performed an above-the-knee amputation in October 2009.
The Schultzes commenced separate medical malpractice lawsuits in Supreme Court, Erie County against Dr. Stoeckl and Dr. Parentis. Both physicians were insured by MLMIC under policies providing primary insurance in the amount of $1.3 million per claim. Under the policies, MLMIC had the right to control the defense of the lawsuits, but the written consent of the physicians was required for settlement. Dr. Parentis also had a $1 million excess insurance policy from HPIC, which provided coverage only "when the aggregate limits of the [MLMIC] Policy have been exhausted by payment of claims" (Morris Aff., Ex. 1).
MLMIC accepted coverage of the actions against Dr. Stoeckl and Dr. Parentis, and it assigned separate defense attorneys to represent the physicians. The two cases were consolidated and proceeded to jury trial in January 2014. On February 4, 2014, the jury returned a verdict against Dr. Parentis in the sum of $8,647,438, but found in favor of Dr. Stoeckl. The verdict against Dr. Parentis was affirmed on appeal, with the Appellate Division, Fourth Department describing the trial as "a prototypical battle of the experts" ( Schultz v. Excelsior Orthopaedics, LLP, 129 AD3d 1606, 1607 [4th Dept 2015] [internal quotation marks and citation omitted] ).
ANALYSIS
Summary judgment is a drastic remedy and should be granted only if there are no material issues of disputed fact (see Sillman v. Twentieth Century–Fox Film Corp., 3 N.Y.2d 395, 404 [1957] ). In evaluating a motion for summary judgment, a court should simply determine whether material issues of disputed fact preclude the grant of judgment as a matter of law (see S.J. Capelin Assoc. v. Globe Mfg. Corp., 34 N.Y.2d 338, 341 [1974] ). The party moving for summary judgment has the initial burden of coming forward with admissible proof to support the motion, so as to warrant the court directing judgment in the movant's favor; the burden then shifts to the opposing party to demonstrate, by admissible evidence, the existence of any triable issue of fact (see Zuckerman v. City of New York, 49 N.Y.2d 557, 562 [1980] ). On such a motion, "the evidence must be viewed in the light most favorable to the opposing party" ( Redcross v. Aetna Cas. & Sur. Co., 260 A.D.2d 908, 914 [3d Dept 1999] ).
A. Legal Standard
An insurer owes a duty to its insured to act in good faith "in defending and settling claims over which it exercises exclusive control on behalf of its insured" ( Pavia v. State Farm Mut. Auto. Ins. Co., 82 N.Y.2d 445, 452 [1993] ). "At the root of the ‘bad faith’ doctrine is the fact that insurers typically exercise complete control over the settlement and defense of claims against their insureds, and, thus, under established agency principles may fairly be required to act in the insured's best interests" (id.).
The party claiming bad faith bears the ultimate burden of "establish[ing] that the insurer's conduct constituted a ‘gross disregard’ of the insured's interests—that is, a deliberate or reckless failure to place on equal footing the interests of its insured with its own interests when considering a settlement offer" ( id. at 453 ). The proponent of the claim need not demonstrate that the insurer acted with a "sinister motive," but proof of ordinary negligence or a mere error in judgment by the carrier is not enough (id.). There must be proof of "a pattern of behavior evincing a conscious or knowing indifference to the probability that an insured would be held personally accountable for a large judgment if a settlement offer within the policy limits were not accepted" ( id. at 453–454 ; see Daus v. Lumbermen's Mut. Cas. Co., 241 A.D.2d 665, 665 [3d Dept 1997], lv denied 90 N.Y.2d 812 [1997] ; see also CBLPath, Inc. v. Lexington Ins. Co., 73 AD3d 829, 830 [2d Dept 2010] ).
In considering whether an insurer acted in bad faith, courts look to factors including: "whether the insurer's investigatory efforts prevented it from making an informed evaluation of the risks of refusing settlement;" "the plaintiff's likelihood of success on the liability issue in the underlying action;" "the potential magnitude of damages and the financial burden each party may be exposed to as a result of a refusal to settle;" "the insurer's [efforts to] properly investigate the claim and any potential defenses thereto;" "the information available to the insurer at the time the demand for settlement is made;" "[t]he insured's fault in delaying or ceasing settlement negotiations;" and "and any other evidence which tends to establish or negate the insurer's bad faith in refusing to settle" ( Pavia, 82 N.Y.2d at 454 ; see Vecchione v. Amica Mut. Ins. Co., 274 A.D.2d 576, 578–579 [2d Dept 2000] ; see also Smith v. Gen. Acc. Ins. Co., 91 N.Y.2d 648, 653–654 [1998] ; PJI 4:67 ).
Thus, "a trial court should look to see if there [was] a high probability that the insured would be subject to personal liability because of the insurer's actions, and whether an excess verdict reasonably could have been predicted" ( Pinto v. Allstate Ins. Co., 221 F3d 394, 399 [2d Cir2000] ). Nonetheless, "[t]he potential for a large plaintiff's verdict does not render an insurer's settlement posture unreasonable so long as the insurer's course was informed by a defensible rationale" ( Federal Ins. Co. v. Liberty Mut. Ins. Co., 158 F.Supp.2d 290, 296 [SDNY 2001], affd 25 Fed Appx 74 [2d Cir2002] ; see Pavia, 82 N.Y.2d at 454 ).
In addition to demonstrating a "pattern or indicia of reckless or conscious disregard for the insured's rights" ( Pavia, 82 N.Y.2d at 456 ), the proponent of the bad-faith claim must prove "that the insured lost an actual opportunity to settle the claim at a time when all serious doubts about the insured's liability were removed" ( id. at 454 [internal quotation marks, citations and alterations omitted]; see Soto v. State Farm Ins. Co., 83 N.Y.2d 718, 723 [1994] ; Quincy Mut. Fire Ins. Co. v. New York Cent. Mut. Fire Ins. Co., 89 F Supp 3d 291, 307 [NDNY 2014] ; see also Doherty v. Merchants Mut. Ins. Co., 74 AD3d 1870, 1871–1872 [4th Dept 2010] ; CBLPath, 73 AD3d at 831 ; Little Princess Express Cab Corp. v. American Tr. Ins. Co., 12 AD3d 266, 267 [1st Dept 2004] ; Vecchione, 274 A.D.2d at 578 ; Daus, 241 A.D.2d at 665–666 ). "Naturally, proof that a demand for settlement was made is a prerequisite to a bad-faith action for failure to settle. However, evidence that a settlement offer was made and not accepted is not dispositive of the insurer's bad faith.... [A]n insurer cannot be compelled to concede liability and settle a questionable claim simply because an opportunity to do so is presented" ( Pavia, 82 N.Y.2d at 454 [internal quotation marks, citations and alterations omitted] ).
Upon proof that the insurer acted in gross disregard of the insured's interests and caused the insured to lose the opportunity to settle the case within policy limits at a time when all serious doubt as to the insured's liability were removed, "the insurer should be required to remedy the harm by paying the excess judgment" ( Soto, 83 N.Y.2d at 723 ; see AFIA v. Continental Ins. Co., 140 A.D.2d 167, 168 [1st Dept 1988] ).
B. HPIC
In moving for summary judgment on its claim for declaratory relief and for the dismissal of Dr. Parentis's counterclaim, HPIC argues principally that it acted in good faith in declining to tender Dr. Parentis's excess policy towards settlement of the Schultzes' claims and, in any event, by the time that MLMIC advised HPIC that its primary policy of $1.3 million was available for settlement, the jury already had returned to the courtroom to deliver its verdict and Dr. Parentis's counsel had been instructed by MLMIC to "take a verdict."
1. The Events of February 4, 2014
The proof submitted by HPIC in support of its motion, including deposition transcripts, trial transcripts and telephone records, shows that the underlying action went to the jury at 1:19 p.m. on February 4, 2014. After deliberating for a little more than an hour, the jury sent out a note ("Jury Note") at 2:24 p.m. asking for a breakdown of the costs of Schultz's life care plan (see Vaverchak EBT, p. 307). The Jury Note, which was read in open court at 2:45 p.m., was perceived by MLMIC's field representative, Domenick Callocchia, and Dr. Parentis's defense counsel, Brian Weidner, as a signal that the jury might have already found against Dr. Parentis on liability and simply was computing the Schultzes' economic damages, for which only Dr. Parentis was liable.
The economic damages that were the subject of the life care plan pertained to the sixth question on the verdict sheet, whereas the issues of negligence and causation were the first two questions (Parentis's Ans., Ex. B).
Towards the end of the trial, Dr. Stoeckl's counsel emailed MLMIC to advise that the trial court had ruled that Dr. Stoeckl would not be jointly and severally liable for Schultz's economic losses, thereby placing potential liability for over $3 million in claimed damages solely on Dr. Parentis (see Morgan EBT, at 241–242; see also Vaverchak EBT, p. 315). However, this report was not shared with HPIC, which had not issued an excess policy to Dr. Stoeckl.
At 2:49 p.m., Callocchia called Keith Vaverchak, the claims examiner in MLMIC's Syracuse office who was responsible for Dr. Parentis's defense, to advise of the Jury Note. That call ended at about 2:50 p.m. Vaverchak immediately telephoned Grace Morgan, the vice-president of claims for HPIC. During this five-minute call, Vaverchak informed Morgan of the contents of the Jury Note and inquired what HPIC wanted to do at that point. Vaverchak testified that Morgan told him that she was "not sure HPIC would be in a position this late to be able to offer anything on their policy" (Vaverchak EBT, pp. 191–192, 197, 318–319). According to Vaverchak, MLMIC had not yet obtained Dr. Parentis's consent or authorized an offer against its policy, but was "just setting the stage" for a subsequent conversation (id., pp. 317–320).
Morgan testified that if Vaverchak had advised her that MLMIC was prepared to offer the full limits of its policy with Dr. Parentis's consent, "she would have evaluated [HPIC's] position and ... made contact with" the president of HPIC, Mark Miller, who had authority to settle claims in emergent situations (Morgan EBT, p. 254). The fact that MLMIC was merely considering offering its policy limit would not have been sufficient for HPIC to make an offer against its excess policy (see id., pp. 260–261).
Morgan testified that she had no authority to settle a claim against an HPIC insured, regardless of amount; settlements must be authorized by the insurer's claims committee or, in emergent situations, by the committee chair, another committee member or HPIC's president (see Morgan EBT, pp. 18–22)
While Morgan and Vaverchak were speaking, the jury returned the courtroom at 2:52 p.m. and was provided a read-back of the costs associated with Schultz's life care plan. The jury was sent out to resume its deliberations at 2:56 p.m.
After considering the implications of the Jury Note, Dr. Parentis's counsel informed Callocchia that he felt duty-bound to raise the possibility of settlement with his client. Callocchia told Weidner that he should do what he thought was best (see Weidner EBT, pp. 303–305, 344; Callocchia EBT, pp. 140–141, 272–280). Weidner raised his concerns regarding the Jury Note with Dr. Parentis and suggested that settlement be explored with Jeffrey Black, the Schultzes' trial attorney. This was the first time that Weidner recommended to Dr. Parentis that the case be settled, and Dr. Parentis quickly accepted his counsel's recommendation (see Weidner EBT, pp. 344–346).
Weidner then approached Black and asked whether there was a possibility of settlement. Specifically, the attorneys discussed whether the Schultzes would be willing to settle the case against Dr. Parentis for $2.3 million, which represented the combined limits of Dr. Parentis's insurance (see id., pp. 352–353). At that point, the Schultzes' demand remained at $3.6 million, representing all of the insurance available to both physicians. Black provisionally agreed to strongly recommend a $2.3 million settlement with Dr. Parentis if such an offer were formally extended (see Black EBT, pp. 335–338, 434; Weidner EBT, pp. 352–354). Black testified that he would not have recommended that the Schultzes accept less than the combined policy limits at that time (see Black EBT, pp. 435, 440; see also Callocchia EBT, pp. 141–142), and the Schultzes trusted Black and would have settled the case on the terms recommended by their counsel (see Schultz EBT, pp. 110–111, 119, 120–122, 143–145). After speaking with Black, Weidner informed Callocchia that the Schultzes were willing to settle their claims against Dr. Parentis for $2.3 million and take their case against Dr. Stoeckl to verdict.
The telephone records submitted by HPIC show that Callocchia placed three calls to MLMIC's Syracuse office after the jury resumed deliberations. In a six-minute call placed at 3:05 p.m., Callocchia advised Gerald Glum, MLMIC's vice-president of claims, that Weidner had approached Black regarding settlement, and the two attorneys were speaking (see Callocchia EBT, pp. 274–275). Although this call originally was placed to Vaverchak, Callocchia learned from Glum that Vaverchak was speaking with Morgan at the time (see id., pp. 275–280). Glum directed Callocchia to obtain Dr. Parentis's written consent, a condition precedent to settlement under the MLMIC policy, and this was done within a minute or two after the call had ended (see id., pp. 275–280).
Callocchia called MLMIC again at 3:14 p.m. In this 3½ minute call with Glum and Vaverchak, Callocchia informed his superiors that Dr. Parentis had given his written consent to settlement (see id., p. 286). It was during this call that Callocchia was advised of the substance of the call between Vaverchak and Morgan. Based upon what he was told, it was Callocchia's understanding that HPIC "was not ready to put their money up and they wanted the jury to deliberate a little more" (id.).
Callocchia's third call was placed at 3:21 p.m. During this call, Glum made MLMIC's full $1.3 million policy available for settlement. He also directed Vaverchak to notify HPIC of MLMIC's tender and ascertain the excess insurer's position (see Glum EBT, pp. 111–112; Vaverchak EBT, pp. 321–322; Callocchia EBT, pp. 291–294). The call ended at 3:34 p.m.
At 3:22 p.m., just after the third call began, Vaverchak sent an email to Glum, others within MLMIC and Morgan summarizing the Jury Note, advising of the Schultzes' willingness to accept the combined policy limits in settlement of the case against Dr. Parentis, and raising the question of whether MLMIC wanted to offer its policy limits. Consistent with his initial conversation with Morgan, Vaverchak notes that he was "not sure HPIC would be in a position to offer anything on their policy." According to Vaverchak, this email was drafted following his first call with Morgan, and he sent it merely "to document the file," rather than to communicate information to his superiors or to request a decision from them (Vaverchak EBT, pp. 309–311, 319).
Vaverchak immediately telephoned Morgan to advise her that Dr. Parentis had consented to settlement, MLMIC had authorized the tender of its full $1.3 million policy, and the "ball is in [HPIC's] court" to decide whether it would tender its $1 million excess policy to allow the insurers to make a $2.3 million offer to the Schultzes (Glum EBT, pp. 143–145; Vaverchak EBT, pp. 198–202, 323–326). During the call, which was placed at 3:37:06 p.m. and lasted until 3:42 p.m., Morgan declined to offer the HPIC policy because she felt that she needed further hints from the jury, particularly in light of the favorable reports that she had received up to that point (see Glum EBT, pp. 143–145; Vaverchak EBT, pp. 200, 314–325; Morgan EBT, pp. 142–145, 146, 159, 166, 253). According to Vaverchak, Morgan did not request more time or indicate that she needed additional time to secure settlement authority.
In her deposition, Morgan lacked any recollection of a second call from Vaverchak. For purposes of HPIC's motion, the Court assumes the truth of Vaverchak's testimony, which is supported by telephone records.
While Vaverchak and Morgan were speaking, Callocchia informed Weidner that HPIC "does not have it ducks in a row and they are not prepared to make any offer in this case," and he therefore directed Weidner to "take a verdict" (Weidner EBT, pp. 358–359, 505–508; see Callocchia EBT, pp. 294–296; see also Parentis EBT, at 282–283). Callocchia understood it to be "definite" that HPIC was not going to tender its excess policy towards a $2.3 million settlement offer, apparently relying on the information that he had received from Glum and Vaverchak regarding the first call between Vaverchak and Morgan (Callocchia EBT, pp. 303–305). For his part, Black testified that he was informed that the offer was zero "pretty close to when the jury ultimately came back" with a verdict (Black EBT, p. 343).
Meanwhile, at 3:29 p.m., during Callocchia's third call with MLMIC's Syracuse office, the jury sent out a note advising that it had reached a verdict. The jury returned to the courtroom and were assembled at 3:42 p.m., which is when the second call between Vaverchak and Morgan concluded, and the verdict against Dr. Parentis was read in open court at 3:44 p.m. (see Vaverchak EBT, p. 331; Weidner EBT, pp. 318–320).
2. Analysis
Dr. Parentis alleges that HPIC's bad-faith refusal to tender its $1 million excess policy during jury deliberations on February 4, 2014 caused him to lose the opportunity to settle the underlying action within the combined limits of available insurance (see Parentis's Ans., ¶¶ 102–117).
As the excess insurer, HPIC was under no duty to offer coverage under its policy until the full limits of MLMIC's primary policy were exhausted. The HPIC policy states that coverage is available only "when the aggregate limits of the [MLMIC] Policy have been exhausted by payment of claims, notwithstanding any other circumstances that exist ..." (Morris Aff., Ex. 1), and the claims examiners for both MLMIC and HPIC understood this to mean that coverage under HPIC's excess policy was not triggered until MLMIC offered the full limits of its primary insurance (see Morgan EBT, p. 141; Vaverchak EBT, p. 208). Thus, HPIC's excess coverage was triggered no earlier than the second telephone call from Vaverchak to Morgan, in which MLMIC orally advised HPIC that it was prepared to tender its full $1.3 million primary policy towards a combined $2.3 million settlement offer.
Assuming for purposes of HPIC's motion that MLMIC's tender served to functionally exhaust the primary insurance policy and trigger the excess layer of coverage, HPIC was not advised of MLMIC's tender until the 3:37 p.m. call from Vaverchak to Morgan. By that time, the jury already had reached a verdict, and Callocchia had directed Weidner to take the verdict based upon his understanding of the first call. The second call between Vaverchak and Morgan concluded at 3:42 p.m., by which time the jury was assembled in the courtroom to deliver its verdict. And at 3:44 p.m., just two minutes after the call had ended, the verdict against Dr. Parentis was read in open court. Thus, HPIC's proof establishes, prima facie, that HPIC was not advised of MLMIC's tender until it was too late to settle the case.
Relying on the policy language requiring exhaustion by "payment of claims," HPIC argues in its written submissions that coverage under its excess policy was not triggered until MLMIC eventually paid over its primary policy to the Schultzes (see Ali v. Federal Ins. Co., 719 F3d 83, 91 [2d Cir2013] ["payment" by primary insurer is clear condition precedent under a similarly-worded excess policy]; Forest Labs., Inc. v. Arch Ins. Co., 116 AD3d 628, 628 [1st Dept 2014], lv denied 24 NY3d 901 [2014] ; see also In re Rapid–Am. Corp., 2016 WL 3292355, *9–11 [Bankr SDNY 2016] ; cf. Zeig v. Massachusetts Bonding & Ins. Co., 23 F.2d 665, 666 [2d Cir1928] ; Koppers Co., Inc. v. Aetna Cas. & Sur. Co., 98 F3d 1440, 1454 [3d Cir1996] [functional exhaustion] ). Nonetheless, at oral argument, HPIC's counsel declined to advance the "extreme case ... that a settlement check has to be made," arguing instead that "a real tender has to be made" (Oral Arg. Trans., pp. 42–43; see also Morgan EBT, pp. 258–259).
In seeking to raise a triable issue of fact, Dr. Parentis and the Schultzes seek to shift the focus away from the period of about seven minutes between Vaverchak's second call to Morgan and the taking of the jury verdict, emphasizing settlement opportunities that allegedly were lost at earlier points in the underlying action. However, for the reasons stated above, coverage under HPIC's excess policy was triggered no earlier than the second phone call from Vaverchak to Morgan.
As stated above, the first call from Vaverchak to Morgan was made at a time when Dr. Parentis had not consented to settlement of the case and MLMIC had not made any portion of its primary policy available for settlement.
Moreover, an insurer's duty of good faith is derived from agency principles and is premised on the insurer's "exclusive control" of litigation ( Pavia, 82 N.Y.2d at 452 ). Here, the plain language of the policy makes clear that HPIC was under no duty to "assume responsibility for the defense, investigation, or management of" the underlying action (Morris Aff., Ex. 1, p. 3; see General Motors Acceptance Corp. v. Nationwide Ins. Co., 4 NY3d 451, 455–456 [2005] ; Liberty Surplus Ins. Corp. v. Segal Co., 420 F3d 65, 69 [2d Cir2005] ; Quincy, 89 F.Supp.3d at 312 ). Nor have Dr. Parentis and the Schultzes come forward with any evidence demonstrating that HPIC exercised any degree of control over Dr. Parentis's defense at trial (see Royal Indem. Co. v. Salomon Smith Barney, 308 A.D.2d 349, 350 [1st Dept 2003] ).
Based on the foregoing, the Court concludes that Dr. Parentis and the Schultzes have failed to raise a triable issue of fact as to whether HPIC's alleged bad faith caused Dr. Parentis to lose the opportunity to settle the underlying action within the limits of available insurance. Given the absence of causation, the Court need not decide whether HPIC has demonstrated its entitlement to summary judgment on the issue of whether it acted in good faith in accordance with its obligations to Dr. Parentis.
Accordingly, HPIC is entitled to summary judgment dismissing Dr. Parentis's counterclaim and a declaration that it had no obligation to make any payment in the underlying action above its $1 million excess policy limit.
C. MLMIC
Limiting its arguments solely to causation, MLMIC moves for summary judgment dismissing Dr. Parentis's cross claim on the ground that there never was an actual opportunity to settle the underlying action within the limits of its primary insurance policy, or even the combined policy limits, at a time when all serious doubts as to Dr. Parentis's liability were removed.
MLMIC submits proof demonstrating that it investigated and evaluated the Schultzes' claims, including liability and damages, from the inception of the case until verdict. While recognizing that the damages claimed by the Schultzes were substantial and exceeded the combined policy limits, MLMIC emphasizes that Dr. Parentis, his trial attorney and testifying medical expert all agreed that liability was questionable and the case was defensible. According to MLMIC's proof, the only physician who opined that Dr. Parentis had deviated from accepted standards of care was the Shultzes' testifying expert, who, according to Dr. Parentis and Callocchia, lacked credibility and was not an impressive witness at trial. In addition, MLMIC relies on the testimony of Dr. Parentis's counsel, Weidner, demonstrating that Dr. Parentis was advised of the risks of going to trial, including the potential for personal financial exposure, but insisted that the case be defended so long as it was defensible. MLMIC argues that it was not until the jury inquired about Schultz's life care plan that the prospect of a favorable verdict for Dr. Parentis grew dim, and MLMIC acted promptly in response to the Jury Note by authorizing the tender of its full $1.3 million policy and notifying HPIC of the same.
The proof adduced by MLMIC also shows that the Schultzes never made a demand to settle their case against Dr. Parentis for the $1.3 million available under his primary policy with MLMIC or even the combined $2.3 million limits of his primary and excess policies. Prior to and during trial, the Schultzes' demand had been for $3.6 million, representing all insurance available to both Dr. Parentis and Dr. Stoeckl (see CBLPath, 73 AD3d at 831 [dismissing bad faith claim where plaintiff "failed to raise a triable issue of fact as to whether (it) made a pre-litigation settlement demand within the policy limit"] ).
Dr. Stoeckl's counsel testified that he understood the Schultzes' June 2012 demand to be $3.6 million, representing all insurance coverage available to the two defendant-physicians, and that neither plaintiffs' counsel, Black, nor the trial judge, Justice Curran, ever approached him with an unbundled demand (see Miller EBT, pp. 77–78). Dr. Parentis's counsel, the Schultzes' counsel and Callocchia all shared the same understanding of the demand (see Weidner EBT, pp. 131, 275–277, 306–307; Callocchia EBT, pp. 194; Black EBT, pp. 403–405). Under the circumstances, it is apparent that the reference to a $2.6 million demand in the March 30, 2012 report from Weidner to MLMIC simply was a mistake (see Brennan Aff., Ex. P [reporting that the Schultzes' counsel had "made a demand for $2.6 million which he said represents the coverage amount in this matter"]; cf. Versichelli Aff., Ex. 26 [referencing $3.6 million demand in report from Weidner to MLMIC sent following subsequent court appearance] ).
Following the reading of the Jury Note, MLMIC immediately convened the necessary claims personnel, promptly obtained Dr. Parentis's written consent to settle the case, and informed HPIC that it would tender its full $1.3 million policy towards a $2.3 million settlement offer if HPIC offered its $1 million excess policy. Even at this point, however, the Schultzes had not reduced their demand below $3.6 million, as their attorney refused to play the "game" of "bidding against himself" and instead was awaiting an offer from Dr. Parentis (Black EBT, pp. 335–338, 446). And after HPIC refused to tender its excess policy as part of the contemplated offer, there was no opportunity for MLMIC to settle the case within the limits of its $1.3 million policy (see United States Fid. & Guar. Co. v. Copfer, 48 N.Y.2d 871, 873 [1979] ["insured's speculations ... are simply not sufficient"] ).
On these facts, the Court is satisfied that MLMIC has met its initial burden of showing that any bad faith on its part did not cause Dr. Parentis to lose "an actual opportunity to settle the [underlying action] at a time when all serious doubts about [Dr. Parentis's] liability were removed" ( Pavia, 82 N.Y.2d at 454 ; see Doherty, 74 AD3d at 1871–1872 ; General Motors Acceptance Corp., 116 AD3d at 469 ] ).
In opposing the motion, Dr. Parentis and the Schultzes explicitly renounce any challenge to the legal framework advanced by MLMIC (see Oral Arg. Trans., pp. 8–9). Rather, they argue that the record supports a finding that all serious doubts about Dr. Parentis's liability were removed prior to the Jury Note, and the issue of causation therefore presents a fact question for a jury to decide.
Thus, Dr. Parentis and the Schultzes highlight the difficulties associated with Dr. Parentis's defense, and they cite criticisms of Dr. Parentis's care and treatment by other medical providers, the tension between the defenses presented by Dr. Parentis and Dr. Stoeckl, the assessments of the case made by the two defense attorneys prior to and during the trial, and certain setbacks for Dr. Parentis at trial. In addition, Dr. Parentis and the Schultzes argue that MLMIC was aware of the substantial prospect that an adverse verdict would result in the imposition of personal liability upon Dr. Parentis, and they emphasize the "shock" and "sympathy" value of a case that started with a broken ankle and ended with an above-the-knee amputation.
With respect to the opinions of other medical providers, Dr. Parentis and the Schultzes cite a report showing that MLMIC was advised in October 2007 that Dr. Stoeckl was "somewhat critical" of the subsequent care and treatment given by Dr. Parentis to Schultz, characterizing the decision to remove a portion of the bone to be "a bit aggressive" (Brennan Aff., Ex. KKK, p. 3). They also cite the deposition testimony of Gregory Miller, Dr. Stoeckl's trial attorney, who recognized the obvious tension between Dr. Stoeckl's conclusion that there was not an orthopedic rationale for surgery and Dr. Parentis's decision to undertake surgery, which naturally would be portrayed at trial as "overly aggressive" (Miller EBT, pp. 192–198, 201–204, 217–218; see also Vaverchak EBT, pp. 50–51, 111–112; Brennan Aff., Exs. I, NNN). And in an email sent to Weidner on the day after the verdict, Miller commented that "[Dr. Parentis's] aggressive surgical approach was just too much to overcome ..." (Brennan Aff., Ex. XXX).
Nonetheless, Miller testified that by the time the case went to trial, Dr. Parentis had a "sufficient answer or response" as to why the surgeries he performed on Schultz did not alleviate his condition (Miller EBT, pp. 197–198), Dr. Stoeckl's view that he could not provide Schultz with a surgical solution did not mean that another physician would be unable to find such a solution (see id., pp. 203–204), and Miller believed that the jury would deliver a verdict in favor of Dr. Parentis (see id., pp. 128–129). Moreover, notwithstanding any criticisms of Dr. Parentis's care that Dr. Stoeckl may have shared with his counsel in 2007, Dr. Parentis and the Schultzes have not cited any trial or deposition testimony given by Dr. Stoeckl that was damaging to Dr. Parentis's defense.
Unlike Dr. Parentis, Dr. Stoeckl was not a foot and ankle specialist.
Relatedly, Dr. Parentis and the Schultzes contend that a January 25, 2011 report from Dr. Stoeckl's counsel to MLMIC reflects additional medical criticism of Dr. Parentis's approach to surgery (see Brennan Aff., Ex. J). This email reports that the consensus of the three medical providers to whom Dr. Stoeckl referred Schultz—a podiatrist, orthopedic foot specialist and physiatrist—"was to leave the foot alone" (id.). However, the focus of this email appears to be on Schultz, not Dr. Parentis, with Miller observing that Schultz was "undermining his own care ... [by] essentially trying to bully everyone around him into doing more and more for him (including surgery)," and the MLMIC claims examiner concurring that her review of Dr. Parentis's records gave her a "weird vibe about Mr. Schultz ..." (id.). And regardless of any consensus among the three providers referenced in the email, Dr. Parentis's testifying expert later opined that it was not a deviation from accepted standards of medical care to pursue surgery in an attempt to address Schultz's ongoing complaints after courses of conservative treatment.
Assuming that the providers' consensus "to leave the foot alone" represented implicit criticism of Dr. Parentis's later decision to operate, it is unclear what foundation, if any, a podiatrist or physiatrist would have had to critique the exercise of medical judgment by Dr. Parentis, an orthopedic surgeon.
The other medical criticism cited by Dr. Parentis and the Schultzes comes from MLMIC's "in-house" review of the allegations of malpractice made against Dr. Stoeckl and Dr. Parentis. In a report dated April 30, 2013, Kendrick Sears, M.D., an orthopedic surgeon, describes Schultz's situation as "a mess" (Brennan Aff., Ex. Z). While recognizing that Schultz "is clearly a frustrating patient, ... operating on pain without a better definition of what is causing the pain doesn't bode well for the outcome" (id.). Dr. Sears notes that Dr. Parentis's decision to operate ultimately led to a "cascade" of procedures and complications (id.). Nonetheless, Dr. Sears does not "find a particular place along the way where Dr. Parentis or [Dr. Stoeckl] deviated in their care. The exception I would suppose would be to having started this whole cascade" (id.). Ultimately, Dr. Sears concluded that the case "needs to be reviewed by someone who specializes in foot and ankle surgery," although he did express concern that the case eventually would be "settled because of the inability to find a point of defense" (id.).
MLMIC eventually retained Eric Bluman, M.D., an orthopedist who specializes in the foot and ankle, to testify on behalf of Dr. Parentis. In a lengthy "Outside Expert Report" dated January 6, 2014, Weidner advised MLMIC that Dr. Bluman was comfortable defending the care and treatment rendered to Schultz by Dr. Parentis, despite characterizing the situation as "an overall bizarre thing. It's an unfortunate chain of events. But it happened, and they happen" (Brennan Aff., Ex. CC, p. 1). According to Weidner's report, Dr. Bluman "does not have issues with the first surgery" performed by Dr. Parentis or the diagnostic testing preceding the surgery, opining that "surgery was warranted and that Dr. Parentis carried it out in an acceptable fashion" (id., p. 2). In particular, Dr. Bluman noted that Parentis's surgical intervention had been preceded by a long course of more conservative therapies (see id.).
Dr. Bluman further advised that it "was not uncommon for one physician to believe that surgery is not indicated and another to think that he may be able to help by doing surgery" (id.). And while Dr. Bluman believed that Dr. Parentis's failure to obtain Schultz's prior medical records from Dr. Stoeckl might constitute a deviation from accepted practice, Dr. Bluman did not believe that this "would have changed anything in the case" (id.). Thus, despite having certain reservations, Dr. Bluman ultimately concluded that all of the surgeries performed by Dr. Parentis were reasonable and appropriate, Dr. Parentis exercised sound medical judgment, and he did not deviate from accepted standards of care so as to cause Schultz an injury. And Dr. Parentis and the Schultzes do not cite anything in Dr. Bluman's trial testimony that was problematic for Dr. Parentis's defense.
Thus, as Dr. Parentis himself testified, no physician other than the Schultzes' testifying expert expressed the opinion that he deviated from accepted standards of care in his treatment of Schultz (see Parentis EBT, pp. 380–381, 403–405, 413–414). In fact, Dr. Parentis remains strongly convinced to this day that he did not commit malpractice and that the verdict against him was based on sympathy, not medical evidence (see id., pp. 315, 415).
Dr. Parentis and the Schultzes also rely upon Weidner's pre-trial assessments of the case. In his very first email to MLMIC following his assignment, Weidner said: "This may be the most bizarre case I have seen yet. I can't believe that Dr. Parentis kept taking [Schultz] back [to surgery] when he wasn't getting any long term relief" (Brennan Aff., Ex. K). Weidner's characterization of the case as "bizarre" was reiterated in a January 16, 2014 report sent to MLMIC (Brennan Aff., Ex. DD; see also id., Ex. CC, p. 1).
This email was sent in response to the MLMIC representative's theory that Schultz was suffering from "Munchausen's syndrome," as she had "never seen anyone normal who is gung ho on amputations" (id.).
Despite defense counsel's use of the word "bizarre" in his pre-trial assessment of the case, Weidner—"a well-regarded and experienced medical malpractice lawyer in Western New York" who has taken dozens of cases to verdict (Oral Arg. Trans., p. 8)—always believed the underlying action be defensible and Dr. Parentis's liability questionable (see Weidner EBT, pp. 124–125, 226, 462–463, 470–471, 498). With respect to MLMIC's in-house review, Weidner acknowledged that Dr. Sears's report gave him some concerns, but he remained of the view that the case against Dr. Parentis was defensible and required "a true expert review" by an orthopedist who specializes in foot and ankle surgery, as recommended by Dr. Sears, who lacked this specialization (Weidner EBT, pp. 463–465; see Versichelli Aff., Ex. 30). Thus, prior to retaining Dr. Bluman as a testifying expert, Weidner believed the case to be one of "questionable liability" (Weidner EBT, p. 462), and after retaining Dr. Bluman and learning of his opinions, Weidner believed that a verdict in favor of Dr. Parentis was more likely than not (see id., pp. 124–125, 226, 498; Vaverchak EBT, pp. 295).
Contrary to Dr. Parentis's contention, the estimated chances of success at trial were not "at best, 50/50" (Parentis's Mem. of Law, at 39). Weidner testified that he believed the chances of a defense verdict to be 50/50 before retaining an outside expert (see Weidner EBT, pp. 204–205; see also infra).
Weidner also was aware that Dr. Stoeckl's testifying expert, Dr. Rohrbacher, felt that the care rendered by Dr. Parentis was appropriate and defensible (see Weidner EBT, pp. 172–173, 468; Miller EBT, pp. 101–102, 266; Callocchia EBT, pp. 58–60).
As to the trial itself, Dr. Parentis and the Schultzes point out the damage done to Dr. Parentis's defense at certain points. While Weidner considered his client's direct testimony to be the "second best ..., if not the best" that he had ever seen in his long career as a medical-malpractice defense attorney (Weidner EBT, p. 272), Dr. Stoeckl's counsel advised MLMIC on February 1, 2014, as the trial was coming to a close, that Dr. Parentis had been cross-examined very effectively by the Schultzes' attorney: "By no means does it signal panic, but it makes the case quite a bit of a close call; much closer than I thought it was following Dr. Parentis's [direct] testimony" (Brennan Aff., Ex. GG). In fact, Weidner acknowledged that the trial had not ended on "upbeat note" for Dr. Parentis (Weidner EBT, p. 447). Dr. Parentis and the Schultzes also cite the very effective testimony given by the entire Schultz family and the sympathetic reaction of the jury to that emotional testimony.
Even following Dr. Parentis's testimony, however, both defense attorneys believed that the jury would deliver a verdict in favor of Dr. Parentis and Dr. Stoeckl (see Miller EBT, pp. 128–129; Weidner EBT, p. 471). Dr. Parentis's counsel believed that the concerns raised by Dr. Sears were adequately addressed at trial (see Weidner EBT, pp. 467–468); Dr. Parentis had, for the most part, handled himself well on cross-examination (see id., p. 471); and Weidner felt good about the way Dr. Parentis's proof went in (see id., p. 461). Further, there was general agreement on the defense side that the Schultzes' expert had testified poorly (see id., pp. 173, 204–205, 267, 272, 311, 462, 468; Callocchia EBT, pp. 104–108, 241–247; Miller EBT, pp. 99–101, 139–144, 236). Thus, following the conclusion of Dr. Parentis's testimony, Weidner remained of the view that a verdict in Dr. Parentis's favor was more likely than not (see id., pp. 459–460).
In addition to the aforementioned liability concerns, Dr. Parentis and the Schultzes emphasize the magnitude of the claimed damages and the resulting personal liability that Dr. Parentis would face in the event of an adverse verdict. Weidner was aware that Dr. Parentis would be the Schultzes' primary target at trial (see Weidner EBT, pp. 384–385), and Dr. Parentis and the Schultzes cite the trial court's ruling relieving Dr. Stoeckl of joint and several liability for Schultz's economic damages, which were claimed to total more than $3 million. Dr. Parentis and the Schultzes also cite a series of reports from Weidner to MLMIC that, at various points in the case, estimated a settlement value of up to $2.5 million and a full verdict value of up to $3 million, which exceeded available insurance. Moreover, the damages claimed by the Schultzes were over $8.7 million (see Brennan Aff., Ex. V, p. 2; see Weidner EBT, pp. 274–275). Relatedly, Dr. Parentis and the Schultzes cite MLMIC's decision to post a $750,000 reserve on the Schultzes' claim as further proof that Dr. Parentis's liability was free from serious doubt (see Vaverchak EBT, pp. 94–95).
Dr. Stoeckl still was potentially liable for the full amount of Schultz's pain and suffering (Brennan Aff., Ex. GG), which was claimed to be $5 million.
In a March 30, 2012 report, Weidner estimated a future lost wages claim of up to $1 million and pain and suffering of at least $750,000 to $1 million (see Brennan Aff., Ex. P, pp. 12–13). At that point, Weidner estimated the settlement value to be in the range of $1.5 million and the verdict value to be between $1.5 million and $2 million (see id.). In April 2013, Weidner advised that his estimates should be increased by the amount of the workers' compensation liens, which totaled about $500,000 (see Brennan Aff., Ex. Y, p. 8). By January 2014, Weidner reported that the workers' compensation lien has increased to about $620,000, and he now estimated settlement value at $2 to $2.5 million and a verdict likely to be in the range of $2.5 to $3 million (see Brennan Aff., Ex. DD, p. 28).
Finally, Dr. Parentis and the Schultzes emphasize the "shock" and "sympathy" value of a case in which a relatively young man treated for a broken ankle ended up with an above-the-knee amputation. For example, in his January 14, 2013 report to MLMIC concerning a pre-trial conference, Dr. Stoeckl's counsel noted that the trial judge (or perhaps Weidner) had observed that the "shock value" of the case would likely affect the jury (Miller EBT, pp. 228–229, 257). Indeed, there does not appear to be any serious dispute that the insurers and the defense attorneys were concerned about the possibility of a verdict based on sympathy rather than medicine, regardless of the trial court's instructions to the jury (see e.g. Vaverchak EBT, pp. 147, 170, 210; Morgan EBT, pp. 129, 228).
Dr. Parentis and the Schultzes also submit the expert affidavit of Bernd G. Heinze, Esq., but this affidavit is limited to the issue of MLMIC's alleged bad faith. It does not contain any discussion of causation or the issue of when the prospect of liability against Dr. Parentis became free from all serious doubts.
On this motion for summary judgment, the Court must view the proof adduced by Dr. Parentis and the Schultzes in the light most favorable to them and give them the benefit of all reasonable inferences. But even viewed in such a light, the Court concludes that Dr. Parentis and the Schultzes have failed to raise a triable issue of fact as to whether Dr. Parentis "lost an actual opportunity to settle the [Schultzes' case] at a time when all serious doubts about [his] liability were removed" (Pavia, at 454 [internal quotation marks, citations and alterations omitted] ).
In particular, there is no fair interpretation of the evidence that would allow the Court to conclude that Dr. Parentis's liability for medical malpractice was not in serious doubt prior to the Jury Note. Dr. Parentis' liability was "vigorously contested" at all times (Weidner EBT, p. 470) and the subject of conflicting expert opinions and testimony. As the Fourth Department recognized in rejecting Dr. Parentis's weight-of-the-evidence challenge, the trial was "a prototypical battle of the experts" ( Schultz, 129 AD3d at 1607 [internal quotation marks and citation omitted] ).
The expert testimony put forward on behalf of Dr. Parentis at trial addressed the medical concerns raised by the Schultzes' testifying expert and Dr. Sears, including the rationale for the initial surgical intervention, and the only physician who opined that Dr. Parentis deviated from accepted standards of care, the Schultzes' expert, did not come off well at trial. Thus, from the time when Dr. Bluman was retained to testify on behalf of Dr. Parentis up until the Jury Note, Weidner believed, and communicated to MLMIC, that a verdict in favor of Dr. Parentis was likely. Dr. Stoeckl's counsel also believed that a verdict in favor of Dr. Parentis was likely, notwithstanding any reservations he may have had about the case prior to trial.
Thus, Dr. Bluman supplied the "point of defense" that Dr. Sears, who did not specialize in foot and ankle injuries, was hard-pressed to find.
And even prior to trial and the retention of Dr. Bluman, Dr. Parentis's counsel believed the case to be one of "questionable liability" (Versichelli Aff., Ex. 30; see Weidner EBT, pp. 124–125, 132–133, 462 [by "questionable," Weidner meant that "the allegations of malpractice were not strong"] ). Weidner and MLMIC also were aware early on that Dr. Stoeckl's testifying expert, Dr. Rohrbacher, felt that the care rendered by Dr. Parentis was in accordance with the relevant standard of care (see Weidner EBT, pp. 172–173, 468; Miller EBT, pp. 101–102, 266; Callocchia EBT, pp. 58–60).
It is not until the jury inquired about the costs of Schultz's life care plan after deliberating for only about 65 minutes that the prospect of a favorable verdict for Dr. Parentis became remote. This simply is not a case where the events prior to trial or at trial served to remove all serious doubts about Dr. Parentis's liability for medical malpractice (compare Schultz, 129 AD3d at 1607 ["prototypical battle of the experts"]; Doherty, 74 AD3d at 1871–1872 [liability for automobile collision clear, but legitimate questions as to serious injury threshold], with New England Ins. Co. v. Healthcare Underwriters Mut. Ins. Co., 295 F3d 232, 239–240 [2d Cir2002] [hospital's witness admitted departure from accepted medical practice], CBLPath, 73 AD3d at 829 ["a medical diagnostic laboratory, negligently switched (plaintiff's) biopsy specimen with a biopsy specimen from another individual, which resulted in (plaintiff) being erroneously diagnosed with breast cancer, and subsequently undergoing an unnecessary double mastectomy"]; Ansonia Assocs. Ltd Partnership v. Public Serv. Mut. Ins. Co., 257 A.D.2d 84, 90 [1st Dept 1999] ["no doubt as to liability" after jury found defendant 80% liable for the injury and to be answerable in punitive damages]; State of New York v. Merchants Ins. Co. of N.H., 109 A.D.2d 935, 936 [3d Dept 1985] [defendant's "vehicle crossed over the center line and collided with decedent in her own lane of traffic"]; Pinto, 221 F3d at 400 [liability conceded]; Scottsdale Ins. Co. v. Indian Harbor Ins. Co., 994 F.Supp.2d 438, 452–453 [SDNY 2014] [plaintiff "prevailed on summary judgment and liability was assured"]; see also St. Paul Fire & Mar. Ins. Co. v. United States Fid. & Guar. Co., 43 N.Y.2d 977, 978 [1978] [liability established at trial] ). As the Court of Appeals has held, an insurance carrier cannot be compelled to concede liability and settle a questionable claim simply because the opportunity to do so may have been presented (see Pavia, 82 N.Y.2d at 454 ).
Dr. Parentis and the Shultzes further contend that there are triable issues of fact because MLMIC failed to timely explore settlement opportunities, failed to consider the Schultzes' pre-trial settlement demands and failed to discuss settlement until the day of the verdict. MLMIC concedes that no offer was made in response to the Schultzes' pre-trial demand for $3.6 million, but this demand was not within the limits of the MLMIC policy or even Dr. Parentis's combined policy limits (see Pavia, 82 N.Y.2d at 454 ; United States Fidelity & Guaranty, 48 N.Y.2d 871, 873 [1979] ). More fundamentally, these alleged failures on the part of MLMIC occurred prior to a time when all serious doubts about Dr. Parentis's liability were removed. And following the Jury Note, the Schultzes would not have accepted less than Dr. Parentis's combined policy limits of $2.3 million (see Black EBT, pp. 435, 440; Weidner EBT, p. 478), which required the tender of HPIC's full excess policy.
Specifically, Black testified that he probably would not have recommended that the Schultzes accept anything less than $2.3 million to settle their claims against Dr. Parentis after the Jury Note because he "was supremely confident that we were going to have a plaintiff's verdict ... well in excess of coverage" (Black EBT, p. 435). For this reason, the Court sees no merit in the contention that MLMIC's failure to offer its $1.3 million primary policy to the Schultzes following the Jury Note caused Dr. Parentis to lose the opportunity to settle the case within the limits of available insurance. As stated above, a finding of causation cannot rest on mere speculation (see Copfer, 48 N.Y.2d at 873 ; CBLPath, 73 AD3d at 832 ).
Moreover, it is undisputed that Dr. Parentis did not give his consent to settle the case—a condition precedent to MLMIC's ability to make an offer of settlement—until after he had learned of the Jury Note. Dr. Parentis testified that he wanted to defend the case as long as it was defensible, he was not concerned with the specific dollar amount demanded by the Schultzes, and he relied on his counsel's advice as to whether the case should be settled (see Parentis EBT, pp. 369–374, 419–420, 369–374; Weidner EBT, pp. 132–133, 239, 488–491). For his part, Weidner believed the case to be defensible at all times, and he had no reason to think the case should be settled, or to initiate settlement discussions, until the Jury Note (see Weidner EBT, pp. 188, 228–229, 313–314, 398, 466, 471–472, 498–499).
Dr. Parentis confirms that, prior to the Jury Note, his counsel did not advise him to settle the case or inform him that the case was not defensible (see Parentis EBT, pp. 182–183, 357–359, 372–374, 423). In fact, Dr. Parentis testified that during the course of the trial, Weidner contacted him to advise that the Schultzes' counsel had inquired about settlement. Dr. Parentis asked for Weidner's advice, and Weidner told Dr. Parentis that they were doing well and that he should not settle (see Parentis EBT, pp. 244–245).
Nor is there any merit to Dr. Parentis's claim that MLMIC failed to communicate the Schultzes' settlement demands or advise him of his potential personal exposure. Even if these contentions were adequately supported by the record, they are insufficient to defeat MLMIC's motion, which is solely based on causation. To be sure, "the failure of the insurer to keep its insured informed of settlement negotiations can constitute some evidence of bad faith" ( Smith, 91 N.Y.2d at 653 ; see Redcross, 260 A.D.2d at 914 ), but such proof does not bear on the issue raised by MLMIC's motion: whether there is a causal connection between the insurer's alleged bad faith and the loss of an actual opportunity to settle the case within the limits of available insurance at a time when all serious doubts about the insured's liability were removed.
As stated above, Dr. Parentis was at least once informed about the Schultzes' settlement demand prior to the Jury Note, and Dr. Parentis's contention that he never was advised about a possibility of an excess verdict or personal liability is belied by the record (see Parentis EBT, pp. 84, 98, 245, 359; Weidner EBT, pp. 235, 248, 379).
Finally, there are no disputed issues of material fact between the two insurance carriers that would preclude the grant of summary judgment to MLMIC. Both insurers agree that Dr. Parentis's liability was questionable and remained in serious doubt at least until the Jury Note, and any loss of the opportunity to settle the underlying action for the combined policy limits after the Jury Note was not attributable to MLMIC's bad faith.
While Callocchia's decision to direct Weidner to take the verdict based upon the outcome of the first call between Vaverchak and Morgan appears to have been a mistake and the better course would have been to direct Weidner to request additional time from the trial court, no party contends that this error rises to the level of bad faith.
Based on the foregoing, MLMIC's motion for summary judgment is granted.
CONCLUSION
The Court has considered the parties' remaining contentions and finds them either unavailing or unnecessary to reach in light of the disposition rendered herein.
ORDERED that HPIC's motion for summary judgment is granted in accordance with the foregoing; and it is further
ORDERED, ADJUDGED and DECREED that HPIC is not obligated to make any payment in the underlying action that is above its $1 million excess policy limit; and it is further
ORDERED that the first counterclaim alleged in the answer of defendant Michael A. Parentis, M.D. is dismissed; and it is further
ORDERED that MLMIC's motion for summary judgment is granted in all respects; and finally it is
ORDERED that the first cross claim contained in the answer of defendant Michael A. Parentis, M.D. is dismissed.
This constitutes the Decision, Order & Judgment of the Court. The original of this Decision, Order & Judgment is being transmitted to HPIC's counsel; all other papers are being transmitted to the Albany County Clerk. The signing of this Decision, Order & Judgment shall not constitute entry or filing under CPLR Rule 2220, and counsel is not relieved from the applicable provisions of that Rule respecting filing, entry and notice of entry.
Papers Considered:
1. Notice of Motion, dated March 13, 2017; Affirmation in Support of Motion for Summary Judgment of Terry Cummings, Esq., dated March 13, 2017, with attached exhibits; Affidavit in Support of Motion for Summary Judgment of Mark D. Morris, sworn to February 10, 2017, with attached exhibit; Plaintiff's Memorandum of Law in Support of Its Motion for Summary Judgment;
2. Notice of Motion, dated March 13, 2017; Affirmation in Support of Michael P. Versichelli, Esq., dated March 13, 2017, with attached exhibits; Defendant Medical Liability Mutual Insurance Company's Memorandum of Law;
3. Affirmation of William J. Brennan, Esq., dated April 14, 2017, with attached exhibits; Affidavit of Bernd G. Heinze, Esq., sworn to April 13, 2017, with attached exhibit; Memorandum of Law in Opposition to the Motions for Summary Judgment by Healthcare Professionals Insurance Company and Medical Liability Mutual Insurance Company;
4. Reply Affirmation in Support of Motion for Summary Judgment of Terry Cummings, Esq., dated April 26, 2017; Plaintiff's Reply Memorandum of Law in Support of Its Motion for Summary Judgment;
5. Reply Affirmation of Michael P. Versichelli, Esq., dated April 28, 2017, with attached exhibits; Defendant Medical Liability Mutual Insurance Company's Reply Memorandum of Law; and
6. Transcript of Oral Argument, dated September 15, 2017.