Opinion
C.A. No. 02C-07-029 (CHT).
Submitted: August 22, 2005.
Decided: February 28, 2006.
On Defendants' Motion for Summary Judgment and Plaintiff's Motion for Partial Summary Judgment.
James T. Perry, Esquire, Michael L. Sensor, Esquire, PERRY SENSOR, Wilmington, DE, Attorneys for Defendant, Delaware Insurance Guaranty Assoc.
Craig A. Karsnitz, Esquire, YOUNG, CONAWAY, STARGATT, TAYLOR, Wilmington, DE, Attorney for Plaintiff.
Wayne A. Marvel, Esquire, MARON MARVEL, P.A., Wilmington, DE, Attorney for Nominal Defendants Alexander, Connie, and Zachary Luciani.
OPINION AND ORDER
Before the Court is the motion for summary judgment filed by Defendant Delaware Insurance Guaranty Association ("DIGA"). Also before the Court is a motion for partial summary judgment filed by the Plaintiff, Bayside Health Association, Chartered ("Bayside"). Given the fact that they address the same issues and portions of the record, both motions have been consolidated for purposes of disposition. That which follows is the Court's resolution of the issues so presented.
STATEMENT OF FACTS AND NATURE OF PROCEEDINGS
There is very little dispute between the parties concerning the circumstances relevant to this portion of the proceedings. On March 1, 1998, Zachary Luciani, the son of Alexander and Connie Luciani, was delivered by Diane A. Adams, D.O., an employee of Bayside at the time of Zachary's birth. Dr. Adams ended her employment with Bayside on or about February 4, 1999, and a short time later, founded Bay Area Womens' Care, LLC.
Because of complications surrounding his birth and delivery, Zachary suffered physical injuries and developmental defects which will incapacitate him for the rest of his life. A little over a year later, on June 18, 1999, Alexander and Connie Luciani filed an action in tort, individually and as next friends of Zachary, against Dr. Adams, Albert H. French, II, M.D. and Bayside. The complaint alleged that Dr. Adams negligently delayed the Caesarian delivery of Zachary resulting in the aforementioned injuries. The Lucianis sought to recover compensation on behalf of Zachary for the physical injuries that were directly inflicted as a result of the negligence of the Defendants. His parents also sought compensation for the emotional distress they contend they suffered because of Zachary's injuries as well as for the medical expenses that have been and will be incurred in seeking treatment for those injuries. Lastly, Alexander Luciani claimed a loss of the consortium of Connie Luciani due as well to the negligence of the defendants.
Luciani v. Adams, D.O., et. al, C.A. No. 99C-06-185 CHT. A second action which had been filed against Milford Memorial Hospital ("Milford Memorial") was consolidated with the instant litigation on March 12, 2000.
The trial of the Luciani litigation commenced before the Court and a jury on November 14, 2001. At the conclusion of the presentation of the evidence, the jury was instructed to determine the relative fault of all parties involved, including the Lucianis, Dr. Adams and Milford Memorial. On December 4, 2001, the jury returned a verdict in favor of the Lucianis. Dr. Adams was found to be fifty percent negligent and Milford Memorial was held responsible for the remaining fifty percent. No negligence was found on the part of the Lucianis whom the jury collectively awarded $4,000,000. The two defendants were therefore determined to each be responsible for $2,000,000. The jury did not apportion the award among the Lucianis or the causes of action pled in their complaint.
The Lucianis dismissed the claim against Dr. French prior to trial. The claim against Milford Memorial was settled during the course of the trial but before the case went to the jury. Nevertheless, the jury was instructed to determine the relative degrees of fault of all involved to properly apportion and/or credit any compensation paid or that would be paid as a result of the settlement and/or any jury verdict.
Luciano v. Adams, D.O., Del. Super. C.A. No. 99C-06-185, Toliver, J. (March 3, 2003) (Mem. Op.), at 2. The parties agreed that for purposes of apportioning liability and to avoid confusing the jury, Bayside and Dr. Adams would be considered as one, and that only Dr. Adams and Milford Memorial would be named when the case as submitted to the jury.
On February 6, 2002, Dr. Adams' motion for judgment notwithstanding the verdict was denied. The Delaware Supreme Court affirmed that decision on December 2, 2003. The Lucianis' motion to conform the entry of judgment to reflect that both Dr. Adams and Bayside were separate entities, but were jointly and severally liable for the $2,000,000 assessed against Dr. Adams, was granted on March 3, 2003.
Id.
At the time of Zachary's birth, Bayside was covered by a professional liability insurance policy issued by PHICO Insurance Company. Dr. Adams was an insured under the same policy. The available coverage for each was $1,000,000 for a total of $2,000,000. However, Dr. Adams was removed as an insured under the policy effective February 4, 1999, when her employment with Bayside ended, approximately four months prior to the date the Plaintiffs filed their complaint initiating this action.
PHICO was declared insolvent by a Pennsylvania court on February 1, 2002. As a consequence, the Delaware Insurance Guaranty Association Act (hereinafter the "Guaranty Act") required that DIGA assume responsibility for any claims against PHICO policies pending in Delaware. The Lucianis then sought payment of the judgment in their favor, turning first to Dr. Adams and Bayside, then to PHICO, and ultimately, DIGA. DIGA responded that there was only one claim that was covered and that the maximum amount it could pay as a result was $300,000. Bayside disagreed, seeking instead to have DIGA pay $300,000 for each of the three causes of action filed by the Lucianis against Dr. Adams, as well as Bayside, for a total of $1,800,000.
18 Del. C. ch. 42 (hereinafter referred to by relevant section only).
Bayside initiated this action shortly thereafter seeking entry of a judgment that would determine the extent of indemnification to which it is entitled from DIGA. DIGA's motion for summary judgment was filed on July 16, 2004. Bayside responded to the motion and moved for partial summary judgement on its own behalf, on October 8, 2004. The matter was briefed and oral argument held on August 11, 2005.
The Lucianis also filed a brief in opposition to DIGA's motion and in support of Bayside's position.
DISCUSSION
Standard Of Review
Summary judgment may be granted only where, considering the facts in a light most favorable to the nonmoving party, there are no material issues of fact. Disposing of litigation via summary judgment is encouraged, when possible, to expeditiously and economically resolve lawsuits. Whereas in this case, cross motions for summary judgment are involved, the parties implicitly concede the absence of material factual disputes and acknowledge the sufficiency of the record to support their respective motions.
Pullman, Inc. v. Phoenix Steel Corp., 304 A.2d 334 (Del.Super.Ct. 1973); and Shultz v. Delaware Trust Co., 360 A.2d 576 (Del.Super.Ct. 1976).
Davis v. University of Del., 240 A.2d 583 (Del. 1968).
Browning-Ferris, Inc. v. Rockford Enters., Inc., 642 A.2d 820 (Del.Super.Ct. 1993).
Obligations Imposed By The Guaranty Act
As noted above, DIGA was created by the Guaranty Act partly as a way to expedite the settlement of covered claims against insolvent insurers and to avoid financial loss to claimants or policyholders. The parties agree that but for the insolvency of PHICO following the jury verdict in favor of the Lucianis, PHICO would have had an obligation to indemnify Bayside under the terms of the policy in question. They agree therefore that the instant controversy arises under the Act. However, they disagree as to who can be deemed a claimant and what constitutes a claim under the statute.
Rosenthalis v. Doctors for Emergency Srvcs., 2004 WL 692686, at *2 (Del.Super.) (citing 18 Del. C. § 4202).
The language at the center of the controversy appears in § 4208 (a)(1)(iii), which reads in relevant part:
The Association shall:
(1) Be obligated to pay valid covered claims. . . . Such obligation shall be satisfied by paying to the claimant . . .:
. . .
(iii) an amount not exceeding $300,000 per claimant for all other covered claims.
§ 4208(a)(1)(iii).
§ 4208(a)(1)(iii).
The statute defines "claimant" as any person making a liability claim. "Person" includes any individual. A "covered claim" is:
§ 4205(3).
§ 4205(10).
[A]n unpaid claim . . . submitted by a claimant, which arises out of and is within the coverage, and subject to the applicable limits, of an insurance policy to which this chapter applies, issued by . . . an insolvent insurer. . . .
§ 4205(6)(a).
§ 4205(6)(a).
Finally, even if a person is deemed to be a claimant who is advancing a covered claim, the Act further provides that DIGA shall:
Be deemed the insurer only to the extent of its obligation on the covered claims and, to such extent, subject to the limitations provided in this chapter, shall have all rights, duties and obligations of the insolvent insurer as if the insurer had not become insolvent.
§ 4208(a)(2).
§ 4208(a)(2).
The initial inquiry for the Court is whether Alexander and Connie Luciani instituted claims distinct from Zachary's negligence action which are covered by the PHICO policy and the Guaranty Act. If the claims are covered, DIGA would have to pay $300,000 per claim under each applicable policy part. As to any claims not so covered, the analysis would end, since the individuals pursuing the same could not be deemed "claimants" as required by § 4205(3).
Contentions Of The Parties
Both sides acknowledge that Zachary's injuries occurred and the underlying complaint was filed while the policy was in effect. It included three categories of coverage. The "Physician and Surgeon Professional Liability Part (PL)" obviously referenced physicians and surgeons. The "Professional Corporation, Association or Partnership Liability Professional Employee Liability Coverage Part (CL/PE)" applied to corporate liability as well as to any liability arising out of the act/omissions of professional employees other than physicians and surgeons. Regardless of who or what was covered, PHICO was obligated to the named insured to do the following:
The three coverages shall hereinafter be referred to as "CL", "PE" and "PL". CL and PE parts provide separate coverages though they are consolidated in the same section.
[P]ay on behalf of the insured all sums which the insured shall be legally obligated to pay as damages because of bodily injury and property damage to which this insurance applies caused by a medical incident which occurs on or after the Initial Effective Date stated in the Declarations and for which claim is reported to PHICO during the policy period.
Def. Mot. Summ. J., Ex. D, CL/PE policy part, at 1.
Def. Mot. Summ. J., Ex. D, CL/PE policy part, at 1.
A "claim" is defined under the policy as an express demand for damages arising from a medical incident to which the insurance applies.
Id.
DIGA's position is essentially premised upon two arguments. First, it contends that the Lucianis are not "claimants" within the definition of the Guaranty Act, nor have they presented "covered claims" requiring redress under that Act or the PHICO policy. There is but one claimant, Zachary Luciani, and one claim, that pertaining to the medical negligence he suffered during the course of his treatment by Dr. Adams and Bayside. Second, DIGA argues that the Lucianis are not entitled to avail themselves of PL coverage as to Dr. Adams because Dr. Adams was removed from the policy before the underlying action was filed. There is, as a result, one claim that DIGA must pay, which by statute, is limited to $300,000.
That obligation was satisfied, DIGA contends, when it deposited a $300,000 supersedeas bond with the Prothonotary, which was later released to the Lucianis by order of the Superior Court on October 10, 2004.
Bayside's primary argument in response is that the Lucianis have raised, by definition, separate claims which are covered by the PHICO policy. It relies on the fact that the Luciani claims were submitted to and decided by the jury which rendered an $4,000,000 award to the Lucianis collectively. PHICO, and therefore DIGA, cannot now contend otherwise in light of that undivided verdict in their favor.
Bayside goes on to contend that an insurer, in this case, PHICO, that defends a claim throughout trial without raising coverage issues cannot thereafter put them before the Court for adjudication. The argument is that without notice to the insured or reservation of rights, an insurer has waived its right to disclaim coverage. Lastly, Bayside argues that a factual issue exists regarding whether notice of the Luciani claims was provided as required during the time Dr. Adams was a named insured under the PHICO policy. DIGA is not therefore entitled to the entry of summary judgment in its favor as to that issue.
The Number Of Covered Claims Presented
Both sides cite to Rosenthalis v. Doctors for Emergency Services, P.A., as supportive of their respective positions. In Rosenthalis, a single incident of medical negligence left four plaintiffs — the estate of the decedent, his widow and his two children, with two causes of action, a wrongful death action and a survival action. The wrongful death action was being pursued by the decedent's widow and their children. The survival action was instituted on behalf of the decedent's estate. There was one policy, issued by PHICO, providing liability coverage for the defendant doctor in the amount of $1,000,000 per incident. PHICO became insolvent prior to trial and DIGA assumed responsibility for the defense of Dr. Gluckman.
Rosenthalis, 2004 WL 692686.
Trial began as scheduled but was terminated before it concluded when the case settled. What was not resolved at that time, however, was the extent to which the four plaintiffs were entitled to compensation from DIGA under the Guaranty Act. The parties agreed to submit the question to the Court concerning ". . . whether DIGA must cover each plaintiff's damages until the policy's $1,000,000 per incident limit was reached." There, as here, DIGA argued that the plaintiffs were pursuing a single claim and were limited to $300,000 and no more. The plaintiffs contended that they were entitled to $300,000 per individual claim but because the policy was limited to $1,000,000, they would each get $250,000 if their interpretation was to prevail.
Id. at *4-5.
The parties in Rosenthalis agreed that the Guaranty Act provides a maximum of up to $300,000 per claim up to the limit of the policy in question, whatever is less. Because the policy limits the coverage to $1,000,000, the plaintiffs would be limited to that amount as opposed to the $1,200,000 they would receive if the policy limits were higher.
The Court, after reviewing the record, determined that the plaintiffs' complaint contained two claims, one for wrongful death and the other a survival action. In maintaining individual causes of action for wrongful death, the decedent's widow and his children were pursuing, under Delaware law, one liability claim arising from one incident of medical negligence. DIGA was therefore obligated to pay them $300,000 collectively. The Court also held, contrary to the argument presented by DIGA, that the Guaranty Act required payment of $300,000 per claim and that the survival cause of action constituted a separate covered claim notwithstanding the fact that both claims arose from the same incident.
When one views the holding in Rosenthalis along with the language of the Guaranty Act referenced above, several conclusions must be drawn. First, while the Act is to be liberally construed, there may be more than one claimant per covered claim, and the maximum amount that can be paid on a single covered claim is $300,000 regardless of the number of claimants pursuing that claim. Second, the definition of a "covered claim" is, in the first instance, dependent upon whether it presents an independent cause of action sustainable against an insured without being inextricably linked/connected to or derived from another cause of action. Third, there may be more than one covered claim which arises out of the same set of operative facts. It is with these points in mind that the Luciani claims must be reviewed in an effort to determine the extent of DIGA's obligations, as PHICO's surrogate under the Guaranty Act.
In this regard, it is readily apparent that Alexander and Connie Luciani, as the next friends of Zachary Luciani, instituted a claim against Bayside and Dr. Adams on his behalf arising out of what the jury found to be their negligent conduct committed during the course of Zachary's delivery. That claim is more particularly described in Count III of the complaint filed on their behalf. No one disputes that Zachary Luciani was not competent to do so in his own right by reason of not having reached the age of majority as well as the crippling effect of the injuries he suffered at birth. Consequently, the only viable conclusion is that Alexander and Connie Luciani have presented a "covered claim" against Bayside and Dr. Adams under the terms of the PHICO policy and the Guaranty Act. The same cannot be said for the remainder of the causes of action raised by the Lucianis.
More specifically, Alexander and Connie Luciani seek, also in Count III of their complaint, to recover compensation for the monies that they have and will expend for medical expenses and other costs associated with Zachary's post injury care and maintenance. Those damages, however, can only be considered a part of Zachary's claim arising from the negligence of and against Bayside and Dr. Adams. It is not a separate cause of action that the Lucianis could maintain in their own right. Both claims by the Lucianis are indistinguishable from and are a part of Zachary's claim for damages based upon the negligence of Bayside and Dr. Adams.
In support of its position, DIGA cites DiFonzo v. Robelen Piano Co. The defense cites Myer v. Dyer, and the authorities referenced therein, in response. Both are applicable to the instant situation but can be reconciled. A cause of action for medical expenses is in fact derivative of a minor's claim for negligence. However, it is the parents, as the parties responsible for the child until he or she reaches the age of majority, who are the proper parties to seek compensation in either regard. Again, there is but one claim.
144 A.2d 247, 248 (Del.Super. 1958).
643 A.2d 1382, 1386 (Del.Super. 1993).
The same conclusion holds sway for the claim made by Alexander and Connie Luciani for emotional distress and/or emotional anguish. As Bayside notes, the PHICO policy requires that compensation be paid for any claim of bodily injury caused by a medical incident and goes on to define bodily injury as ". . . injury to the human body, illness or disease sustained by a person. . . ." While one can argue as to whether "mental anguish" is subsumed within the phrase "bodily injury", the Court will assume that the answer is in the affirmative for present purposes. The question which results is whether the Lucianis claim in this regard is a "covered claim".
PHICO Policy No. HCL 16223, General Definitions p. 6 of 11.
Viewing the language of the policy, the Court must conclude that the bodily injury at issue must be the direct result of a medical incident involving or visited upon the person claiming the loss. Common sense and the authority cited by DIGA, by analogy, is persuasive in this regard. Moreover, neither Bayside or the Lucianis have been able to provide any support for the proposition that emotional distress, unaccompanied by physical injury to the claimant, should fall within the meaning of that term.
See Gill v. Nationwide Mut. Ins. Co., 1994 WL 150902, at *2 (Del.Super.). See also Mergenthaler v. Asbestos Corp. of America, 480 A.2d 647, 651 (Del. 1984); Robb v. Pennsylvania Railroad Company, 210 A.2d 709, 714-15 (Del. 1965).
Here, the mental anguish was not proximately caused by the negligence of Bayside and Dr. Adams. Nor was the damage claimed occasioned by physical injury to Alexander and Connie Luciani. It was instead the vicarious result of the injuries to Zachary following the conduct complained of, but without any direct connection to that conduct. This loss is not therefore covered under the policy. And, because the loss of consortium suffered by Alexander Luciani is derivative of Connie Luciani's claim for mental anguish, it is not covered. DIGA is not required to compensate the Lucianis in either regard as a result.
Luciani, Del. Super., C.A. No. 99C-06-185 CHT.
To the extent that it was unclear notwithstanding the arguments and authorities submitted by the parties, the Court concludes that there are two separate coverages provided by the instant PHICO policy, i.e., one insuring Bayside, and the other, Dr. Adams. The two are separate entities with distinct liabilities as the Court noted previously. Nothing in the Guaranty Act, or the common law of this State relative to that statute, precludes such a result. The Court further concludes as a result that while there is but one covered claim that the Lucianis may advance, it may be advanced against Bayside and against Dr. Adams. Having reached that conclusion, the Court now turns to the question of whether the coverage afforded Dr. Adams under the policy may be relied upon to provide $300,000 of compensation in addition to that already paid to the Lucianis, for a total of $600,000.
Id. at 8. That distinction is reflected as well in the order entered in underlying action declaring that both were separately and individually liable for the injuries visited upon Zachary Luciani. See also DIGA v. The Medical Protective Company, Del. Super., C.A. No. 03C-05-023, Vaughn, J. (July 27, 1995) (Mem. Op.).
Coverage Under The Policy For Dr. Adams
While the parties do not dispute whether coverage for Bayside exists under the PHICO policy, there is disagreement as to whether coverage under the same policy may be used to satisfy the judgment in question in so far as Dr. Adams is concerned. Again, DIGA contends that Dr. Adams terminated her association with Bayside prior to the initiation of this litigation and/or the receipt of any notice of any claims by the Lucianis. Accordingly, and because it is a "claims made" policy as opposed to an "occurrence" policy, Dr. Adams is not entitled to coverage under the policy in question. Bayside suggests that filing a complaint during the time Dr. Adams was associated with Bayside is not required and that less formal written notice would suffice. Since the record does not indicate that such notice was not provided, Bayside contends there are questions of material fact which preclude the entry of summary judgment at this point in the process.
Bayside cites Hoechst Delaware Corp. v. Certain Underwriters at Loyds, London, 656 A.2d 1094 (Del. 1995), as support for the proposition.
The PL coverage provides in pertinent part:
PHICO . . . agrees with the named insured to pay on behalf of the insured all sums which the insured shall be legally obligated to pay as damages because of:
(a) bodily injury or property damage to which this insurance applies caused by a medical incident;
(b) . . . and, which occurs on or after the Initial Effective Date stated in the Declarations, and for which claim is reported to PHICO during the policy period, arising from the practice of the insured's profession as a physician.
Def. Mot. Summ. J., Ex. D, PL policy part, at 1.
Def. Mot. Summ. J., Ex. D, PL policy part, at 1.
Like the CL coverage pertaining to Bayside, the PL coverage applicable to Dr. Adams is in fact "claims made" coverage. The parties are correct in that regard, and that such coverage requires both that the incident take place and notice of any claim arising therefrom be provided during the period of the coverage so afforded. "Claims made" policies differ from "occurrence" policies in that "occurrence" policies cover liability which occurs during the policy period, no matter when a claim is made.
20-130 Appleman on Insurance § 130.4 (2nd Ed. 2005).
22-139 Appleman on Insurance § 139.8 (2nd Ed. 2005).
It is not disputed that Dr. Adams was an insured under the PL coverage afforded by the PHICO policy. The effective date of that coverage was August 18, 1997. It is conceded that the coverage terminated on February 4, 1999, the date Dr. Adams' employment with Bayside ended. Nor is there any question that the complaint containing the Luciani claims was filed on June 18, 1999, approximately four months later.
There is also an absence of any dispute relative to the assertions that PHICO directed and/or controlled the litigation. Counsel retained by PHICO provided the actual defense presented during the litigation up to the return of the jury's verdict against Dr. Adams. There is no evidence in the record to indicate that PHICO reserved any right to question or challenge the existence of coverage for Dr. Adams under the policy. Nor is there any indication that notice of any kind was provided to Dr. Adams that she might not be otherwise afforded coverage under the PHICO policy.
Given this background, the Court must conclude that any claim filed against Dr. Adams would have to have been filed between August 18, 1997 and February 4, 1997. Claims filed against the doctor outside of this time frame, are not covered. Bayside argues nonetheless that because the record does not demonstrate whether informal notice of the claim was provided before Dr. Adams departed Bayside, summary judgment should not be granted. The Court does not agree.
The underlying litigation began, as noted above, in 1999. This coverage action was initiated in 2002. If there were any undiscovered evidence relative to this issue, it is more than hard to believe that Bayside, Dr. Adams or the Lucianis, would not have attempted to put it before the Court. No such effort, aside from the affidavit and discovery responses appended to the briefing filed in connection with this motion, has been exercised. The Court must therefore conclude that nothing else exists and will decide the question on the record now before it. That, however, still does not end the discussion.
As DIGA notes in its reply brief, the purpose of summary judgment is to identify and address contentions bereft of factual support in the existing record. See Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). See also Burkhart v. Davies, 602 A.2d 56 (Del. 1991); O'Donald v. McConnell, 2004 Del. Lexis 365. Bayside's argument in this regard falls into that category and must be treated accordingly.
A finding that notice of the Lucianis' claim was not provided before Dr. Adams left Bayside would be dispositive but for the fact that PHICO did not contest or dispute the existence of coverage. Nor did PHICO reserve the right to do so, or at least it did not inform Dr. Adams of it intention to do so. Counsel retained by PHICO represented Dr. Adams and controlled the course of the litigation. Indeed, it was counsel appointed by PHICO, in answers to interrogatories, who indicated that Dr. Adams, as well as Dr. French and Bayside, were each covered under the policy up to $1,000,000 per claim and $3,000,000 in the aggregate. Those responses were preceded by the initial referral of the case to counsel wherein PHICO indicated that the first notice of the claim was received on July 1, 1999, well after Dr. Adams left Bayside. This constitutes a waiver of the right to do so at this stage of the proceedings.
Luciani, Del. Super. C.A. No. 99C-06-185, Defs. Answers to Interrogs. D.I. 4, at 2.
Pl. Reply Br., D.I. 26, Ex. A. This finding is further buttressed by a memo from Sharon Ruth dated May 29, 2002, which clearly indicates that PHICO was aware of the period of time that Dr. Adams was covered under the PHICO policy. Defs. Mot. Summ. J., Ex. F. In spite of this knowledge, PHICO appeared on behalf of Dr. Adams and defended her in the Luciani litigation without limitation or reservation.
See Warner v. State, 787 A.2d 1001 (Del. 2000). See also Arnold v. Society for Sav. Bancorp., 650 A.2d 270 (Del. 1994); Steptore v. Masco Construction Co., Inc., 643 So.2d 1213 (La. 1994).
DIGA contends that in spite of the aforementioned facts, it has not waived the right to dispute Dr. Adams' entitlement to coverage. It apparently bases that position on § 4218 of the Guaranty Act. A close reading of that authority does not support DIGA's argument. There was no default or other failure to defend the Luciani claims by PHICO. Just the opposite took place. Counsel assumed the representation of the PHICO insureds as it was instructed to do, without reservation. DIGA also ignores § 4208(a)(2), which as stated above, mandates that DIGA assume the "rights, duties and obligations of the insolvent insured."
DIGA cites Chris Epicopo Const. Co. v. Int'l Underwriters Ins. Co. as a basis for relieving DIGA of responsibility for PHICO's actions. That case, however, is not helpful given the fact that its holding applies to whether prejudgment interest and attorneys fees can be considered as "covered claims". It does not address the issue of whether DIGA can be bound by the waiver of coverage by an insolvent insurer. The City of Greensboro v. Reserve Ins. Co., cited as well by DIGA, is even less helpful since it to defines the obligation of a guaranty association to pay only "covered claims" to the extent allowed under the policy in question.
1994 WL 555381 (Del.Super.).
321 S.E.2d 232 (N.C.Ct.App. 1984).
DIGA has repeatedly argued that it stands in the stead of the insolvent insurer and that a claimant cannot get more under the Guaranty Act without authorization in that law than it could from the insolvent insurer under the policy. The Court agrees, but holds the corollary to be true as well i.e., the claimant is entitled to no less in the absence of a statutory command to that end. The Court further concludes that no such authority exists. Consequently, given the stated purpose of the Act to avoid financial loss to claimants or policyholders and the directive in § 4206 that the Act is to be liberally construed to achieve that end, DIGA will not now be allowed to avoid the consequences of PHICO's actions and deny coverage of the claim made against Dr. Adams.
See DIGA v. Christiana Care Health Servs., 2006 Del. LEXIS 32. This recent decision handed down by the Delaware Supreme Court is noted here for the general proposition that liabilities and duties attach to successors in interest, in this case DIGA, as if it the liabilities and duties had been created or contracted by it.
If DIGA's view were to be adopted, the issue of coverage might never be resolved without the expenditure of substantial time and resources to the detriment of any claimant awaiting compensation as well as any insured hoping to get the benefit of coverage purchased with premiums paid, thereby avoiding financial loss.