# FILED
Ap ril 16, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk STATE OF TENNESSEE, e x rel., ) DOUGLAS M. SIZEMORE, ) Commissioner of Commerce and ) Insurance for the State of Tennessee, ) ) Plaintiff/Appellee, ) ) Appeal No. ) 01-A-01-9610- CH-00449 VS. ) ) Davidson Chancery ) No. 92-1120-II (III) UNITED PHYSICIAN INSURANCE ) RISK RETENTION GROUP, ) ) Defendant/Appellee, ) ) IN RE: NARESH B. DAVE, M.D. ) ) Claimant/Appell ant. )

COURT OF APPE ALS OF TENNESSEE MIDDLE SEC TION AT NASHVILLE
APPEALE D FRO M THE C HANC ERY C OURT O F DAVI DSON COUN TY AT NASHVILLE, TENN ESSEE THE HONORABLE ROBERT S. BRA NDT, CHANC ELLOR

RENARD A. HIRSCH ROBIN L. HAR RIS SMITH & HIRSCH 619 Woodland Street Nashvil le, Tennessee 37206 Attorneys for Jeanne Barnes Br yant, Recei ver for United Phys icians Insur ance Risk R etention Group KENNETH M. BRYANT W ILLIAM E. LONG, JR. TRABUE , STUR DIVAN T & DeWITT 2500 Nashvi lle City

Center Nashvil le, Tennessee 37219 Attorneys for Naresh B. Dave, M.D.

REVERSED AN D REMAND ED

BEN H. CAN TRELL, JUDGE
CONCUR: TODD, P.J., M .S. LEW IS, J. 

## O P I N I O N- 2 - The Receiver

of an insurance co mpanyin liquidation denied the claim of a policyholder, because the Proof of Claim form required under the Insurance Rehabilitati on and Liquidati on Act, Tenn. Code An n. § 56-9-101 et seq., was filed after the deadline. F ollowinga hearing on the denial of the c laim, the Speci al Master for the ChanceryCourt ofDavidson County found that the failure to ti mely file was due to excusable neglect, and r ecommended thatthe late filingbe excused and the claim be accepted as ti mely filed.

The Chancellor

declared that he was unable to follow the Master’s recommendation, holding that the court had no more authority under the Act to excuse the late filing than did the Receiver. We believe t h at t he Chancellor was mist aken, and we accor

dingly remand this case to the Cha ncery Cou rt to determineif the facts support the appel lant’s asser tion of excusabl e neglect.

I.

In 1991 , Dr. Naresh P. Dave(pronounced D ah ! vay) , an orthopedic surgeon practicingin Tampa Flori da, purchased a policy of professional malpractice insurance from the Unit ed Physici ans Insurance R isk Retenti on Group (UPI ), a Tennessee company. The policy included ret roactive coverag e for acts performed on or after October

1, 1987.

UPI subsequently

went into receiver

ship. On Jul y 16, 1992, the ChanceryCo urt of Davidson C ounty ordered that the company be liquid ated, and appointed Jeanne Barnes Bryant as Special D eputy Recei ver for that purpose. The Chancellor’s order specified July 23, 1993 as the d eadline for filing of claim s against the liquid ation estate.- 3 - Dr. Dave had performed knee sur gery on Constance T. Hale on March 8, 1990. Ms. H ale subs equentl y sent Dr . Dave a not ice of her intent to initiate malpractice litigat ion against him, in accordance w ith the req uirements of the Fl orida malpractice statute. On Augu st 19 , 199 2, Dr. Dave wrote a letter to UPI, which timely notified the company of Ms . Hale’s c laim. However Dr. Dave does not claim that this notice was an effecti ve su bstit ute for the Proof of Cl aim form , whose fili ng was necessary to preserve the claimant’ s right to rec eive a share in theliquidati on estate. See Tenn. Code Ann. § 56- 9-323.

UPI appointed a Flor ida attorney named Kenneth Deacon to represent Dr. Dave in the malpractice action. Like the othe r p olicyhol der s, Dr. Dav e receive d instruction s from the Receiver regard ing the necessity of filing the Pr

oof of Claim form in a timely manner. He also received a reminder from Mr. Deacon of the importance of filin g on t ime, to gethe r wi th anot her bl ank copy of th e Proof of Clai m form.

Because of a n app aren t mis comm unic atio n bet we en Ms. Nancy Castellano, who was Dr. Dave’s office manager, and Bonnie Montgomery , a paralegal employed by Mr. Deacon’s firm, the Proof of Claim form was not filed on ti me. Copies of faxes and other documents in therecord indi cate thatMs. Castellano erroneously beli eve d that Mr . De acon had a gre ed tosubm it t he for m on D r. D ave ’s b ehal f.

On September 24, 1993, t he Receive r sent Dr. Dave a le tter notifyi ng him that because his

Proof of Claim form was not timely filed, cover

age to defend the Hale claim would be terminated immed iately. Dr. Dave su bseq uen tly ret aine d his own counsel, w ho submitted an executed Proof of Clai m form to Ms. Barn es on October 27, 1993, together

with an ex planation of the ci rcumstances su rrounding the missed deadline. The Receiver declined to reinstate coverage, and Dr . Dave ti mely object ed, thus preserv ing his r ight to a hear ing in chancery cour t on the questi on. See Tenn. Code Ann. § 56-9- 327.- 4 - The Cha ncel lor had appointed a Special M aster to hear appeals by those who object ed to denials of cov erage. The Speci al Master s ubmitted a report on Dr. Dave’s case, whi ch summariz ed the facts leadingup to the missed deadl ine, concluded that thedelay was due to excusable neglect, and r ecommended that the Court appl y its po wer un der T enn . R. Ci v. P. 6.02(2) to retroacti vely e xtend the fili ng deadline for Dr . Dave’s benefit, in order

to render his

notice timely

.

The Chancellor

did not agree with the Mas terthat the Court had the authority to extend the filing deadline, and he accordingly sustained Ms. Barnes’ objection to the Master ’s report, without co mmenting on the allegations of excusable neglect. Thi s appeal followed.

II.

In his memorandum, the Chancel lor noted that un der the circ umstances of this case, the Liquidat ion Statute does not permit the R eceiver t o treat a late- filed claim as if it were ti mely filed. See Tenn. Code Ann. § 56- 9-323. The memorandum goes on to say : “Itis helpful to consider the respective roles of the

court and the receiv

er . . . . The receiver

does the real work. Th e court’ s involv ement is quit e limited . .

. . Restricti ng the court’s authority to allow late filed cl aims to the same auth ority giv en to the receiver seems to be in keeping with the respective roles for the court and the receiver established by

the Act.

. . . “This Court c onclud es that a court su pervising a receivership is bound by the same statute t hat limits th e authority of the Receiver to allow late filed cl aims . .

. . If the Receiver concludes that a late filed claim s hould not be allowed, then judicial review of the Receiver’s decisio n is limited to considerat ion of whether the Receiver acted illeg ally, arbitrari ly, or i n an abuse ofdiscretion. There is no de novo

judicial review

of the Receiver’s decis ion.”- 5 - We belie ve the Court appl ied an unnecessari ly rest ricted inter pretation of its po we rs in decid ing this case. While the liquidati on statute assi gns to the Chancery Court of Dav idson County a specified rol e in all ins urance liq uidation proceedings, it does not purport to l imit the tradi tional equi table power s of a court of chan cery, nor to abridg e the applicati on of the Tennessee Rules of Civil Procedure.

Rule 6.02 Tenn. R. Civ. P. reads in per tinent part: Enlargement. -- W hen by statute or by these rules or by a notice gi ven thereunder or byorder of court an act is r equi red or allowed to be done at or within a specified time, the court for cause show n may, at any time in its discretio n, (1 ) . . . (2) upon motion made after the expirati on of th e specified peri od permit the act to be done, where the failure to act was the result of excusable neglect.

Tenn. Code Ann. § 56-9-327 establishes a procedure w hereby an individual whose claim is den ied by the R eceiver may object and may

receive a prompt hear ing. The statute states in part: “The m atter may be heard by the court
or by a court- appoin ted re feree w ho shal l submi t f indings of fact along with such referee’s recommendation.” If the legisl ature had intended to limit t he stand ard of review in the manner specified by the chancel lor, this statute would seem to be a logical place for it to so state. But no such statement is to be found in this statute or in any other

part of the Act.
Perhaps the trial court was swayed by the lang uage contained in a recentTennessee Supreme Cou rt case w hich it ci ted in its memor andum, S tate of Tennessee

ex rel v. UPI, in re: Vasudev V. Kulkarni, M .D., 921 S.W .2d 176 (1996). In that case, the Co urt emp hasiz ed the i mporta nce of a u niform t reatme nt of cl aims and of deadlines in or

der to avoi d “a piecemeal a nd protracted proce ssingof clai ms inconsistent

with the Act’s stated principles of efficiency, econ omy, and equi ty.” 921 S.W.2d at 180.- 6 - Howeve r th e Ku lkarni case

did not involve the power of the chancery court to revie w the acti ons of the Recei ver. It rather rais ed the questio n of whether the Receiver could establish a uniform acceler ated date by whi ch any medica l incident covered under any of U PI’s polici es had to be report ed in order to qualify for

benefits, regardless of the reportingperiods prov ided for in the policies themselves. In holding that the Receiver’s pow ers were broad enough to encompass such an action, we do not believe t he Court intend ed thereby to nu lli fy the equitable powers of the chance ry court.

In reaching t his conclusi on, we are not express ing an opinion oneway or anot her a s to wh ethe r the fac ts fo und by the Spec ial Ma ster actu ally c onst itute excusable ne glect, but o nly that thechancellor is entitled to make that inq uiry.

III.

The order of the tri al court is reverse d. Remand t his cause to the ChanceryCourt of Davidso n County for further proceedin gs consistent with this opinion. Tax the costs on appeal to the appellee.

_____________________________ BEN H. CAN TRELL, JUDGE CONCUR:

_______________________________ HENRY F . TODD, PRESID ING JUDGE MIDDLE SEC TION

_______________________________ SAMUEL L. LEWIS, JUDGE