Opinion ID: 1969926
Heading Depth: 1
Heading Rank: 3

Heading: The Insurance of HMC and its Physicians

Text: An understanding of the levels of insurance coverage HMC obtained for itself and its physician employees is also essential to this case. The best way to conceptualize the layers of insurance is to imagine two columns, each with four layers; the first column showing the insurance HMC obtained for its physicians and the second showing the apparently identical coverage it obtained on its own behalf. The bottom level of each column represents a $200,000.00 self-insured layer of basic coverage. The next level shows the $1,000,000.00 Fund limit of liability. The third layer is a self-insured excess layer of $3,000,000.00. The fourth represents a $25,000,000.00 layer of excess insurance. Viewing the physicians' column of insurance alongside HMC's column, we consider some preliminary examples demonstrating how coverage is structured in cases in which a plaintiff sues an HMC physician and asserts that HMC is vicariously liable. We first consider a situation in which the parties settle for $200,000.00. Such a settlement would indisputably not require recourse to HMC's column of insurance because the primarily liable physician has sufficient insurance coverage to finance the settlement. Similarly, a case with a settlement value of $1,200,000.00 would also not require monies from HMC's column of coverage because the payment from the physician's first layer plus the full amount of the physician's statutory coverage would satisfy the claim. A claim greater than $1,200,000.00 but less than $1,400,000.00 would also not raise the issue in this case because, regardless of whether the additional $200,000.00 comes from the physician's self-insured excess layer or HMC's self-insured primary layer of coverage, the resources for the settlement would come from HMC. The issue arises where, as here, the settlement amounts in the underlying medical malpractice actions were each in excess of $1,400,000.00. A settlement in excess of $1,400,000.00 requires a determination of whether settlement amounts must be paid from the third level of the physician's column, the level representing $3,000,000.00 in self-insured excess coverage, or the second level of HMC's insurance column, representing the statutory coverage of HMC. The Fund contends that the additional settlement funds should come from the physician's excess insurance layer and HMC contends that they should come from the second layer of HMC's column.