# FILED May 28, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk IN THE COURT OF AP PEALS OF

TENNESSEE MIDDLE SECT ION AT NASHV ILLE STATE OF TENNESSEE, ex. rel., ) DOUGLAS M . SIZEMOR E, ) Davidson Chancery Court Comm issioner of the Depar

tment ) Rule No. 9 2-1120-I (II) of Comm erce and Insurance

for the ) State of Tennessee, ) Appeal No. ) 01A01-9610-CH-00484 Plaintiff/Appellee, ) ) VS. ) ) UNITED P

HYSICIANS I

NSURANC E ) RISK RETEN TION GROU P, (In ) receivership under T.C.A. § 56-9-101 ) et seq.) ) ) Defendant/Appellee, ) ) Claim of JAN INA LOSH EK, ) ) Claimant/Appellant, ) ) Claim of ROBERT J. SLUTZKY, M.D., ) ) Claimant. )

APPEAL FROM THE DAVIDSON COUNTY CHANCERY

COURT OF

NASHVILLE, T ENNESSEE HONORABLE ELL EN HOBBS LYLE, C HANCELLOR JOHN KNOX WALKUP SARAH HIESTAND Attorney Gene

ral and Reporter Assistant Attorney Gene ral Financial Division 500 Charlotte Avenue Nashville, TN 37243-0496 RENARD A. HIRSCH, JR. #009489 619 Woodland Street Nashville, TN 37206 ATTORNEYS FOR DEFENDANTS/APPELL EES HOLL INS, WAGSTER & YARBROUGH John L. Norris #6007 Suite 2210, SunTrust Center 424 Church Street Nashville, TN 37219 ATTORNEY FOR CLAI MANT/APPELLAN

T 

### REVERSED AN

D REMANDED HENRY F. TODD PRESIDING

JUDGE, MIDDL

E SECTION CONCUR: BEN H. CANTRELL , JUDGE DAVID H. WEL

LES, JUDGE By desig nation-2-

STATE OF TENNESSEE, ex. rel., ) DOUGLAS M . SIZEMOR E, ) Davidson Chancery Court Comm issioner of the Depar

tment ) Rule No. 9 2-1120-I (II) of Comm erce and Insurance

for the ) State of Tennessee, ) Appeal No. ) 01A01-9610-CH-00484 Plaintiff/Appellee, ) ) VS. ) ) UNITED P

HYSICIANS I

NSURANC E ) RISK RETEN TION GROU P, (In ) receivership under T.C.A. § 56-9-101 ) et seq.) ) ) Defendant/Appellee, ) ) Claim of JAN INA LOSH EK, ) ) Claimant/Appellant, ) ) Claim of ROBERT J. SLUTZKY, M.D., ) ) Claimant. )



## O P I N I O N

This appeal involves the rejec tion of a cl aim against a liability insure r in a chancery receivership. The

appella nt, Janina Loshek, was a patient of Dr. Rober t Slutsky who
was insured a

gainst p rofessi onal liabil ity by

United Physicians I

nsurance Retention Group which has been placed in receivership under T.C.A. §§ 56-9-101 et seq.

On April22, 1992, the patient, Ms. Loshek received unanticipated injury during surgery conducted by Dr. Slutsky. On April 29, 1992, the doctor repo rted the in cident to the claims department of his insurer.

On July 16, 1992, the Trial Court entered an “Agreed Order of Reh abilitat ion” providing in part a s follows: W. The liquidator shall give or cause to be given notice of the Order o f Liq

uidation in

accord ance with T.C.A. § 56-9-311 as soon as po ssible. (4 ) By

first cla ss mail to all persons known or reasonably

expected to have claims against the insurer inclu ding all policyholders, at their last known a ddress as indicated by

the records of the insurer. (Emphasis supplied)-3- X. Except as otherwise established by the liquidator with approval of the Court, notice to potential claimants under T.C.A. § 56-9-311(a) shall require claimants to file with the liquidator their claims together with proper proofs there of under T.C.A. § 56-9-324, on or before the date the liquidator shall specify in the notice, w hich deadline shall be 12:01 a.m., July 21, 1993.
On August 5, 1992, the doctor report ed the inj ury of Ms. L oshek to th

e claims department

of the insu rer, se ndin g a

copy of a lette r from the attorne y f or the pa tient, da ted July 23, 1992, requesting medical records of the pa tient. The letter from the attorney containedhis
n ameand address, and was subsequently delivered to the receiver by the insurer as part of t

h e general transfer of r

ecords to the receiver.

On August 17, 1992, the receiver of the insurer sent to the doctor a notice of the deadline for filin g claim s. No notic e of the d eadline was sent t

o the pati ent.

On October 22, 1992, counsel for the patient notified the doctor that the patient intendedto sue for damages. At this time, neither the patient nor her atto rney knew of the receiv ership or

the dead line for f iling cla ims.

On February

12, 1993, an employee

of the receiver

wrote to the doctor inquiring about the status of the Loshek claim. The doctor re sponded that he had no further information.

On Septembe

r 3, 1993, the rec eiver wr ote the do ctor tha

t his c laim had been rejected for failure to file same on or be fore July 21, 1993.
The patie nt filed a late cla im. The da

te of filing is not shown, but it was sworn to on March 25, 1996. The receiver objected to the claim of the patient. The Trial Court referred the issue to the Clerk and Master.-4- On May 13, 1996, when the ma tter was heard by

the Master, no distribut ion to general liability claimants had been authorized or made. Approximately 50 disputed claims had not been adjudicated.

The Master recommended tha t the receiver’s denial of the patients claim be upheld. The Trial Court affirmed.

On appea l, the pat ient pre sents a single issu e, as follows: 1. Whether th

e proof o f claim f

iling de adline wa s errone ously enforced against Janina L oshek when she was not given notice of the liquidation proceeding or of the proof of cla im filing deadline even though she was clearly entitled to such notice.
The basis of appellant’s l ate claim is that she was entitled to notice of the receiv ership a

nd did not r

eceive it. T.C.A. § 56-9-311 providesin pertine nt part a s follows: Notice of liquidation order - Method - Contents - Effect of notice. (a) Unless the court otherwise directs, the liquidator shall give or cause to be give n notice o f the liqui dation or der as so on as po ss ib le by:

- - - - (4) First class mail to all persons known or reasona bly expected to have claims against the insurer , including all pol icy holders, at their known address as indicated by the records of the insurer; and

- - - - (b) Except as otherwise established by the liquidator with approval of the court, notice to potential claimants under subsection (a) shall require claimants to file with the liquidator their claims, together with proper proofs thereofunder § 56-9-324, on or before a date the liquidator shall specify in the notice.

- - - - (d) If notice is given in accordance with this section, the distribution of assets of the insurer under this chapter shall be conclusive with respect to all claimants, whether or not they received notice. (Emphasis supplied.)
It is clear from the above that persons having a damage c laim against insured may file a claim in the receivership proceeding s of the liability insurance c ompany of the insured.

The receiver asserts that

the patie nt is guilt y of lache s in delay

ing to fi le a cla

im after learning of the

liquidation. It does not appear that this defense w as presented to or acted-5-

upon by the Trial Court. The issue in this appea l is whether the patient should be allowedto file
a late claim becau se of failure t o receive the notice of deadline as required by the statute a nd order of the Tria l Court.

The receiver relies upon Lawreszak v. Nationwi

de Insura nce Co ., Ohio Ap p. 1977, 392 N.E.2 d 1094 in which the

injured p arty

brough t an action again st the liab ility insurer of the alleged tortfeasor and the Court held that the injured party

has a “su bstantial , but unvested right”in the liab ility

insuranc e of the t

ortfea sor until ju dgment h as been o btained a gain st t he tortfeasor. This au th or it y is distinguishable by the fa ct that the insurer was not in liquidation, whereas the insurer in the present case is in liquidation under a stat ute which specific ally provides for notice to and claims of “all persons --- reasona bly expected to have c laims ag ainst the insurer.” Also, the r

eceive r rece ived cor responde nce and record s which re asonably notified him of the claim of Ms. Loshek.

The brief of the receiver admits that the appellant sued Dr. Slutsky and obtained
a judgment against him on November 1, 1995. Even under Lawreszak v. Nationwide , the “substan tial unve sted rig

ht” has no w become

an enfor ceable right.

The rec eiver’ s brief st

ates: Loshek could have filed a c laim against U.P.I. during the litigation period. However, the right to file

a claim includes the right to receive notice of the deadline. The failure to receive a notice should excuse late filing unless the dela y prejudiced

the orde rly procee dings. The evid ence shows that no s uch prej udice would resul t.-6- The judgment

of the Trial Court

is reversed, and the cause is remanded to the T rial Court for entry of a

n order requiring the acce ptance and consideration of the claim of Janina Loshek upon its merits, a

nd for fu rther a ppropria te proceedings. Costs of thi s appeal are ass ess e d against the receiver for pa yment out of the funds of the r eceivership. 

### REVERSED AN

D REMANDED

___________________________________ HENRY F. TODD PRESIDING

JUDGE, MIDDL

E SECTION

CONCUR:

____________________________ BEN H. CANTRELL , JUDGE

____________________________ DAVID H. WEL

LES, JUDGE By desig nation