Opinion ID: 2275546
Heading Depth: 1
Heading Rank: 3

Heading: PIC Becomes Insolvent and the Parties Settle the Medical Malpractice Action

Text: PIC, the insurer for Dr. Desai, became insolvent on January 21, 1998. (R. 96a, 119a). The Association thereby became obligated, subject to the terms of the Act, to pay covered claims [3] asserted against the PIC casualty insurance policy issued to Dr. Desai. 40 P.S. § 991.1801. Pursuant to Section 991.1803(b)(2), the Association also undertook the defense of Dr. Desai and the case proceeded. (R. 96a, 119a). On August 26, 1999, in part, because Appellants had concerns about the strength of their case (R. 57a, ¶16), the parties entered into and requested that the trial court approve a settlement of the action. The settlement provided for a total payment to Appellants of $750,000.00. The Association agreed to pay $200,000.00 pursuant to and subject to the terms of the Act. The Pennsylvania Medical Professional Liability Catastrophe Loss Fund (the CAT fund) agreed to pay the remaining $550,000.00. [4] The settlement was complicated, however, by the fact that PIC had become insolvent during the pendency of the action. Although the Association agreed to assume the obligations of PIC, it expressly reserved its rights pursuant to 40 P.S. § 991.1817(a) to offset the amount it would have to pay against the funds Aetna previously paid Appellants. (R. 74a-75a). Aware that the Association had reserved its rights, the trial court approved the settlement. (R. 79a, 90a-92a).