as i said your honour's morning i represent lexington insurance company the insurer that issued the primary and access professional liability possible policies to ross like i'm going to first address coverage but that duty is determined by the actual factual allegations of the blade not simply by slapping a legal theory such as negligence on a claim that doesn't really serve negligence out a copy of the plane during the various times before the t r o he said he did send updates concerning the case to that to us as he would do well as the representative of the insured would keep could be used on their case so here the evidence is from our perspective that we were under the assumption he was operating under the self insured intention when retention when the retained and i would like to point situation in this case because there was just no evidence that they were prejudiced by mr foldes representation as this as i sat i mean the timeline as they for six months they were represented by a very well regarded  claiming you have to also show there was some prejudice in the representation and there is simply no showing of that here in the states and then if i thought everything would return to my point as to why  duty to defend was not even triggered by the complaint allegation and again you have to look at the complaint as a whole i did medical malpractise for a long time and this complaint does not allege even though it's not a claim  that title negligence it doesn't allege that this the study was terminated as the result of an exercise of medical judgment or a sham from accepted standards of practice there is no well the allegation that they need negligently gave a patient the wrong medication it all focuses on rather a deliberate wrongful termination of a sphere a mental could be some future injuries that's not the same your honor saying there was a deviation from the standard of practice that was approximate as of these women women's injuries you don't issue an insurance policy to cover that they're not going to participate you know this is not a typical case where some of the cases cited by plato they go on for six seven years and then the insurer reserves their rights this is happening at least with respect to all its representation in a matter of weeks and very quickly we didn't have information about sri it's as i am he didn't have information about other aspects of the s seeking i let me rephrase that i'm not i'm not asking what the deficit would be so what is that what was what were the alleged injuries that were received by the participants that are claiming that they were the victims of medical saving back seat it was not alleged that there is any proof or proximate cause that this would result in a recurrence in fact when they entered the study as attached to the  it's a research protocol they're specifically told in the study that this might not do anything you are not a patient you're not receiving medical treatment you're a research subject so again i believe the the morning on is natalie limber on behalf of landmark american insurance company lemark american insurance company or landmark is all refer to them is the  directors and officers liability carrier for rosalind franklin this case is about donated funds earmarked for the lifetime treatment of breast cancer patients and  cancer research did not go to correct but it set up the alive laboratory this institution that was named for dr springer's wife who passed away from breast cancer this was his life mission and this is what he wanted to continue not only that the consent forms entered into by the patients provided that they were to receive this ad infinitum for the rest of their lives roslyn cannot have diverted these funds to other cancer research with our violating those consent forms that were signed by these patients so if they had diverted at some point all of the funds to some to for instance  research and that and this deprives these patients of their care they couldn't have done that without running afoul of some forms so therefore they were not able to do whatever cancer research that they wanted to do with this money so when they paid the money to these patients so that they could take this money that was intended for their benefit and their cancer cancer treatment and started a new way to get f d a approval at another institution it was a discouragement the the fact that the that the donation agreement says cancer research  is mitigated by all of the other evidence and in the case that was discovered about what his intent was and what the what the patient in terms of medical malpractise is based on the doctrine of informed consent these patients consen to be a part of this program based on representations that were made to them when they signed up for the program that they were going to be getting an effective treatment for the rest of their lives they testified at the preliminary injunction hearing that they would not have such that had they known of the risks that a key vaccine ingredient would have run out or that the program could have been terminated prematurely then they said they would not have signed up for the program and there they are damaged because their participation in this program who took them from participating in other programs there's no determination here that anyone was damaged there's only allegation honor the the way that the case preceded it was clear that that was the direction that they were heading in terms of their in terms of the only allegations that outdoor colorable in th rosalind had a board of directors and the board of directors decide to terminate the program actually it's not the board of directors it's the institutional review board ok but it's a safe they said no no they don't sit in the  kind of describes this they gave a recommendation that the institutional review board is there to protect patient human subjects that are part of a research institution so they made the decision whether to continue or terminate the research protocol based on in this case their decision was based on it lack of scientific medical professional so the board of directors have anything to do with their decision making process and determination your honor i believe that eventually had to it didn't have to be  i don't know ok i'll be honest i don't know ok but the folk at the issues in this case a focused on the role of the institutional review board and the decision making process of the institutional review board not on the board of directors across like frank like it and it's been characterized that the institutional review board made and made an administrative decision and that's not the role under the regulations of the institutional future but the concern from also sets of also indicates that what the vaccine does is boost their immunity against the recurrence of breast cancer testified that they were told at the outset of the program that this that this was a life saving treatment that was the theme that was presented by the underlying plaintiffs in this case that this was a life saving this is really not for me this is we're society you know that they said well i signed up and i believe for purposes of a medical malpractise case i believe it would be a question of fact and therefore there could still be reasonable anticipation of liability for a medical malpractise claim irrespective of that that just goes to the credibility of their testimony in terms of whether they were injured or not because they were made  badly there they were sympathetic it would have simply gone to their credibility in terms of whether or not they were informed of the risks for purposes of breach of a of the duty to give in speculation as to the motivations of the underlying plaintiff's attorneys for carving out that amount was it's unfounded t there please the court i'll get my name's michael gray and my colleague benita davis and i are here on behalf of rosalind franklin university of medicine and science i'd like to begin by addressing a question that justice palmer asked and i believe your honor asked what were the damages alleged excuse me in the medical negligence conduct of all a complaint and i would like to respond to that by saying that every which i understand that is a distinction between emotional trauma and physical injury but i do believe that the complaint allege the potential for bodily injury in that it alleged that the patients lives had been being a coverage lawyer and not an all the time tort lawyer i believe there is some but my view is that there is some needed establishment of a bodily injury to connect with the emotional trauma in recover but we are not talking about in the first instance the obligation to ultimately indemnified we are looking at whether an insurer that has a duty to defend is presented with a lawsuit a potentially alleges covered claim and we submit that the allegations in the olla complaint that the patient's lives have been shortened by withdrawal of lifesaving medicine creates the potential that we're that you do need to indemnify was a stablished through lexington's conduct and it amounted to a stop a for breach of the two most fundamental illinois insurance coverage principles that exist and that is that they breached both the peppers doctrine and i would i would tell you here's what they did lexington first has traditionally admitted in response to your arbitrary number fourteen that they have to turn evolved to come out and defend rossley now that was done in april of two thousand and four not two months before not weeks before the preliminary injunction hearing but several months before women are injunction mr felt that he was not acting as independent or pepper scuffs but rather he was acting in his normal course of insurance defense practice that he had been engaged in fraud his career where he had two clients one was the insured and one was the insurer and of course he couldn't have been acting as pepper's counsel because  the because like seem to never reserve its rights until after a settlement agreement in principle was reached therefore mr polk had no basis on which to determine whether lexington's and his other client universities interests  contained that language and additional language what that letter said the university is going to make a first off offer is going to be to restart the vaccine program and then mr bouck said to mr ban following a i g's representative i don't think they're going to accept that offer instead i think they're going to want money so he clearly told lexington in that letter yes we're making an offer but i don't believe that offer is going to work and we're going to have to come to you for stocks from raising the exclusion of medical malpractise i believe to stop or else based based on the peppers doctor i believe they're stopped because they violated both dr ok but if it but but it's  medical malpractise claims there has to be injury and so i don't understand you don't want to go to that because you think they're stopped from raising a cover for us but what about that covers the phones what's your what's that a single component of a multi count complaint could be covered here we had to make medical negligence count that plant that the that the plaintiffs had been injured because their lives had been shortened by the withdrawal of lifesaving medicine is that allegation your honor that i think triggers the defense obligation for lex and i think one stat happened the remaining course of the case is such that there was no trier of fact or tr law that ever got to that question because subsequently that count along with the d n o counts were all settled in reasonable anticipation of liability or otherwise covered claims and as this court knows that was mistreated their insured in the manners that i am speaking about then that exclusion that they rely on not exclusion but the failure there their coverage difference that it doesn't amount to  has been they're stopped from asserting it under alco and the whole body of the only coverage of coverage cases i think it's telling that this reservation of rights letter that lexington ultimately was two days after the settlement agreement in principle which was entered into with life sentence for allowing the case had been ongoing not for a matter of weeks but mr bork was actually told to go out and defend lexington back in april  initial draft complaint was sent to the university and to lexington so he had been on the case for a number of months now nearly four weeks and like seem to have been fully unanswered and in fact i think to your honor's point justice taylor the university did make an offer to restart the program just as mr polk had advised mr bond follow but that offer as he suspected would be rejected and instead the plaintiffs demanded a money money settlement now after the settlement agreement in principle and after the reservation rights whether lexington was utterly silent while the agreement was actually being drafted in texas during that time period lexington actually received draft settlement agreements and they were asked to comment never once did they raise the  concept that the university's following through on the settlement would be an uninsured voluntary payment they also failed in that reservation of rights letter or ever to disclose to the university that there was a conflict between the insurers interests and the insurance interests not only did they neglect to advise of the conflict they never advised that the university had the right to select its own house and sell that council that was selected by lexington was the drafter of the agreement of which in part lexington now complains and finally it declined to defend its insured and to pay for the settlement after the deal had been consequent consummated releases had been signing them when he had been paid so they pretended for about three quarters of your defendants insured but they didn't they sent an untimely reservation of rights that never advised of conflicts never gave them the right to select their own council they ignored draft settlement agreements that sought their input never telling them ever telling the university it had problems and then it  both of these insurance companies are are liable how do we resolve this question of what the i'm looking for the term the court complaint of the  complaint is she would be looking into that the central focus of the underlying complaint or should we be looking to the fact that in a good faith way that several burgess and the general counsel roslyn testified that when she entered that settlement agreement in principle she was settling dno claims and she was settling med mal claims she was very concerned about fifty seven breast  of claim that you are such if if there is a claim that you are settling in reasonable anticipation of liability and it is covered under one policy then it's a problem if that jurisdiction the i'll call them medical negligence oddly injury claims and the d n o claims fifty seven breast cancer patients certainly settle for three million dollars is certainly a reasonable settlement lexington declined coverage precisely nine years to the day ago to this day it still hasn't paid a penny of the defense costs that mr bouck incurred rozell shoulder those expenses case she didn't draft any pleadings or motions she interrogated no witnesses at the preliminary injunction hearing she didn't write any reports to lexington and very importantly she didn't write the settlement agreement so imagine an illinois  they control pictures of experience but i think she can fall in the same way that any client any insured who is involved in a claim where a defense lawyer has been appointed by an insure relationship with the ensure her and in this instance certainly ms burgess and would participated in the defense and it's a crazy world judge where heavy participation in a defense and cooperation in involvement is not viewed as performing the assistance and cooperation condition of a policy but is rather view trust for the purpose of the underlying point is to seek f d a approval to restart the program now that program f d a approval was never obtained and the money was ultimately distributed to the point it's by way of constitutes a does growth rather than a loss covered under either of their policies i would submit that the even a geisha that we have been in for the last seven years is prejudice enough without seeing a penny of defense costs or a penny in the folks helped him gather documents did not attend the first day of the preliminary injunction hearing but was there the second day to negotiate a settlement she was very active in the case but can you imagine in illinois where a corporate client who has its general counsel get involved in a case is subsequently determined to having control of its defense for purposes of the insurance obligations of an insurer under the peppers or stop that's utterly  inconsistent with with every case i've ever ever read i think that involved insured is something that insurers seek it helps them to defend their case and that's what happened here and nothing more controlling the defense to m gardener firm once bob hope was appointed there were other issues with garner heard that but it is undisputed that mr vox involvement in the case provided the basis on which for him to proceed as the sole defense lawyer that's what ms burgess and testif that that lawyer should automatically understand the only peppers are independent counsel it doesn't mean that the that the carrier is relieved of its obligations to tell its insured my interest conflicts with yours i want to get out of coverage and you want to be pointless and in some ways i can't serve your interest in doing it that's what insurance entitle to whether they're involved agent or employee is a lawyer or not there's no testimony that ms burgess knew anything about insurance evoked is in a position where he's he's put something in into the into the settlement agreement which now ultimately if it's determined to be at the sportsman's ultimately would benefit the class well for it's not a mel claim then why was mr bouck out there defending the university we were entitled to know specifically not just in in some murky mysterious fashion that the ensure insured has to be told what the conflict is and then it has to be given the right to pick its own lawyer or to waive the conflict and proceed with in this case mr boat that was never that wasn't done in the reservation rights it wasn't done as the settlement agreements were being drafted it wasn't done in the declaration and it was never done before the settlement agreement in principle and it is our contention that that breaches the peppers now as to i mean i would say this imagine illinois where an insurer can beat the peppers doctrine by merely waiting to reserve its rights until after deal is reached that's contrary again every case i've ever read on the topic  the heart of it is that and ensure that breaches its duty to defend and fails to file a d j action is a stop from the city covered covered defenses we're talking about here so here i think it's in arguable that lexington never really defended it merely by pretending to defend and then waiting until the case is settled and then declining coverage that's why this case doesn't fit neatly into other stop cases because at least in the other stuff all cases the insurer has the courtesy of the kind of declining coverage before the one every penny of his fees for the cases paid by the university it is truly your honor that that the university paid the first hundred thousand dollars of his fees as part of itself int some other nicer name but that's the central component had to take money from someone which was not entitle and the second element a necessary element is that the insured must not have suffered a loss which this court has as i interpret it as a deprivation so here the university stole nothing except that eighteen million dollars in gifts from dr sprayer over the years and those gifts were given for cancer research and that's what the money was used for there's not a scintilla of evidence anywhere that any penny of that eight million dollars was ever used for anything other than cancer research and it continues today to be used for cancer research there's a document in the in the certified record that wasn't mentioned i don't think in anyone's briefs but it's at c five one one six three five three four zero it lists the value of apply laboratories principal amount of the segregated account at the time of the settlement agreement as seven million dollars the insurers argue that the two point five million component of the settlement was really a turnover or a disgorgement of dr springer's and mischel first gift which was two point five million in bank stock that had a book value of two point five at that time and we submit that the headline laboratory balance of seven on dr springer is eighteen over the years to two point five had nothing to do with any of any balance or any specific gift of  ms limbert believes that the only program ongoing at the bligh laboratories at the time of the settlement was the t t n vaccine problem that's not true and again in that same batch of documents in the sort of fight record there is a report from dr hume who was one of the research scientists at the bloody laboratories he comments on not just the t t n vaccine program but there were three other cancer research programs ongoing at the laboratories at the time of the settlement and in his report he said this is what i've been doing for the past several years and this is what i intend to continue doing at the bligh laboratories again the settlement had nothing to do with a evidence in the case to that there's an were rebutted the only evidence in the case is from the president of the university it's general counsel and c f o who all testified that they had to take that money out of their general operating and this speaks to the second element of discord when and that is did we suffer a loss dr welsh testified he is the president of the university that instead of any other means he had to take three million bucks out of the general  that that was a substantial significant portion of the university's entire account and that it was a great hardship for them to lose that money during the year instead of putting money into classrooms teachers plans and equipment they had to suffer a three million dollar loss with that i should stop unless your honour's have additional questions above one statement made he said indicated that both had been on the pile for months and months and looking at my timeline garber files a notice of removal in august two thousand and four in september two thousand or raaz one writes to gardner and given the situation which was the ethical conflict the case will now be handled by paul and september fourteenth fifteenth two thousand then the luminary hearing started pretty quickly boles involvement was a very short i think i heard that an admission that ross one was paying these bills that was the arrangement they have the flexing how it typically also he says well it's not we didn't appoint all he was operating under the outside our so we do have is it your position that you you you haven't the let's can didn't violate its its responsibilities because in showing that we didn't that our policy is not triggered the other point more separately is you know peppers is not a clear you have to get someone in there raising and expected and intended a variety of other defenses so when they're finalizing the settlement agreement that was ultimately were approved which i think there's no dispute that ferguson was happily the play and additionally you have both testimony that what they wanted was a quote unquote the scorching order which speaks to the two point five million dollar component and the primary focus is the primary focus was on restarting this program through discussion in order to their theory of medical malpractise based on a breach of the doctrine of informed consent that was their theme based on especially given the fact that immediately before the preliminary injunction hearing they produce an expert report which drove that home and  a development lastly i just want to point to what the exclusionary language so that on the medical malpractise issue the exclusionary language of the landmark policy is a liability a true it is liability attributable to professional medical malpractise including the rendering or failure to render in medical service  so the complaint here was a failure to render a medical service they needed the money so that they could go get that medical service thank you very much  actually coverage in order for the insurer to be stopped the insured has to show that there was the potential for coverage and that the insured ignored that potential and failed to defend think here that's clearly what happened and the only other thing i would comment is on the landmarks contention that the whatever that a primary fork is or the primary included allowing the plainest to enter a program without that they knew it would prevent them from entering a different program it promised them in it in ad infinitum treatment but terminated the program it failed to diligently  act in response to the demands to restart the program at cetera again we don't have to prove it is our submission that there was actually coverage under even the landmark policy that didn't have a duty to defend because under u