Opinion ID: 2742517
Heading Depth: 2
Heading Rank: 3

Heading: Policy reformation

Text: WVMIC argues that the 2010 Policy should be reformed because UHP intended to have shared policy limits for medical incidents occurring prior to January 1, 2008, whereas the 2010 policy, as written, only provides UHP with separate policy limits for those medical incidents. In support of its argument, WVMIC directs this Court to the amendatory endorsement to the 2008 policy, which expressly states that UHP’s corporate limits were changed from shared to separate “effective 01/01/2008.” (emphasis added.). WVMIC argues that the “effective” date on UHP’s separate policy limits endorsement was actually the “retroactive” date, i.e., that the separate limits were applicable only to medical incidents which occurred after that date. There is nothing in the 2008 policy, however, including the amendatory endorsement, to indicate any change to the policy’s “retroactive” date. This is not unlike when WVMIC first issued this claims-made policy in 2005. The policy’s coverage went into effect on January 1, 2005, but its retroactive date was 17 January 1, 2002, thereby sweeping into the policy any medical incidents that might have occurred from January 1, 2002, forward. WVMIC did precisely the same thing in 2008, when it changed UHP’s limits from shared to separate by an amendatory endorsement effective January 1, 2008, with a retroactive date of January 1, 2002, thereby bringing within those coverage limits any medical incident occurring after January 1, 2002. Notwithstanding the fact that there was no change in the policy’s “retroactive” date, either in 2008 or, for that matter, in its application for the 2010 Policy,17 WVMIC wants this Court to rely upon the “effective” date on the amendatory endorsement to the 2008 policy as a “retroactive date,” and then to use that as a springboard to rewrite the 2010 Policy to list UHP as a sharing insured for medical incidents that occurred between the policy’s January 1, 2002, retroactive date and December 31, 2007. First, regardless of the coverage that may or may not have been negotiated for purposes of the 2008 policy, that policy has expired and is not applicable—the only policy under our consideration is the 2010 Policy. Second, it is clear that “retroactive date” is a term of art, which has been legislatively defined as “the date designated in the policy declarations, before which coverage is not applicable.”18 Third, as demonstrated in the quoted policy language above, the 2010 Policy is replete with 17 As indicated previously, the 2010 Policy states that WVMIC relied upon the statements made in the application in issuing the policy. 18 See W.Va. Code § 29-12B-3(e) (defining term “retroactive date”); see also supra note 8. 18 references to the policy’s “retroactive” date; the policy defines “retroactive date as that date specified in the policy declarations;” and the schedule of insureds in the policy declarations lists the “retroactive date” for each named insured. Similar language is found in the 2008 policy. Consequently, we cannot conclude the terms “effective” and “retroactive” may be used interchangeably in this instance.19 19 We note that the record contains portions of a deposition transcript of a WVMIC senior claims consultant who explained that the “retroactive” date applies to the date of the medical incident under a claims-made policy, whereas the “effective” date on a policy endorsement means that a claim has to be made after that “effective” date in order for the endorsement to apply: Q. [A]nd if there would be . . . endorsements issued during the policy period, those would become part of the policy? A. Right. Q. And those endorsements, when they’re issued, they have effective dates as to when they take effect? A. Right. Q. And then the claim would have to have been made after the effective date of that endorsement for that endorsement to apply, correct? A. Yes. . . . . Q. [T]he retroactive date applies to the date the medical incident occurs, right? That’s the date you use - - the medical incident had to have occurred after the retroactive date? A. Yes. While we do not rely on this deposition testimony in reaching our decision, we do observe that it is consistent with the legislative definition of “retroactive,” as distinguished from the term “effective.” 19 WVMIC essentially asks this Court to accept that it made what would be a glaring error in policy limits for a claims-made policy, and that it made that error not once, not twice, not three times, but four times. The policies for years 2008 through 2011 each provide UHP with separate limits of coverage with no restriction that such separate limits were applicable only to medical incidents occurring after January 1, 2008. Even the policy declarations for the 2011 policy, which issued after this declaratory judgment action was instituted and after the parties had already debated this coverage issue in the context of their settlement negotiations, reflects that UHP has separate limits with a retroactive date of January 1, 2002. If, in fact, these policies did not accurately reflect either the coverage UHP intended to acquire or the coverage WVMIC intended to provide, then logic compels the conclusion that WVMIC would have issued a policy in 2011 that accomplished the desired result. As demonstrated above, WVMIC relied upon UHP’s application for the 2010 Policy in which it expressly requested separate limits of coverage with a retroactive date of January 1, 2002—that is precisely the policy that WVMIC issued to UHP in 2010.20 While WVMIC seeks a reformation that would effectively result in no further insurance coverage 20 Similarly, in Ohio Farmers Insurance Company v. Video Bank, Inc., 200 W.Va. 39, 44, 488 S.E.2d 39, 44 (1997), a case relied upon by WVMIC, we reversed a circuit court’s order that reformed an insurance policy stating that “the written policy actually issued by Ohio Farmers Insurance Company conformed to Ms. McCourt’s request[.]” 20 being available under the 2010 Policy for the Mesh Plaintiffs’ claims,21 during oral argument before this Court, counsel indicated that UHP wanted to change to separate limits beginning in 2008 in anticipation that these claims would be made against Dr. Nutt. Such argument certainly signals that UHP’s objective was to obtain more, rather than less, coverage for itself through separate policy limits. It bears repeating that “[i]t is only when the document has been found to be ambiguous that the determination of intent through extrinsic evidence become [sic] a question of fact[,]” Payne v. Weston,, 195 W.Va. 502, 507, 466 S.E.2d 161, 166 (1995), and that “[w]e will not rewrite the terms of the policy; instead, we enforce it as written.” Id., at 507, 466 S.E.2d at 166. Under the facts and circumstances presented in this case, and considering that there were sophisticated parties22 on both sides of the policy in question, we cannot find that a policy reformation is warranted. 21 Were this Court to begin rewriting insurance policies with the goal of excluding previously asserted claims that would otherwise be covered under a policy’s plain and unambiguous terms, we would be sanctioning a course of particular peril. While we recognize that there may be a case where policy reformation is appropriate, such a result would be especially imprudent in a case, such as this, where the insured has already been released and can support its insurer’s quest for reformation without personal risk. 22 The Mesh Plaintiffs advise this Court that WVMIC’s 2012 Annual Report reflects that it is the largest medical liability insurer in West Virginia, owning fifty-five percent of the medical malpractice market in this state. As such, WVMIC clearly understands both the manner in which claims-made polices operate and how policy language is to be written. 21 Based upon our discussion above, and consistent with our prior law, we apply the plain and unambiguous terms of the 2010 Policy to hold that UHP is a named insured with a separate annual aggregate limit of $3 million for the claims asserted by the Mesh Plaintiffs. Syllabus, Keffer 153 W.Va. 813, 172 S.E.2d 714; see also, Syl. Pt. 2, Shamblin, 175 W.Va. 337, 332 S.E.2d 639. This $3 million is in addition to the $3 million previously tendered to the respondents under Dr. Nutt’s tail coverage. To be clear, and contrary to the circuit court’s ruling, there are no insurance limits available under prior policy periods for the subject claims. The only additional insurance limit to be paid by WVMIC is UHP’s separate annual aggregate of $3 million under the 2010 Policy.23 IV. Conclusion Based upon the foregoing, the decision of the Circuit Court of Kanawha County, West Virginia, is reversed and this case is remanded for entry of an order consistent with this opinion. Reversed and remanded. 23 Any remaining issues are disposed of by our ruling herein. 22