Court Opinion

ID: 9600015
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:23:05.050727+00
Date Added: 2024-06-11T18:01:48.605851
License: Public Domain

FIDEL, Judge,
dissenting.
The first defining feature of this “claims-made” coverage case is that a claim was made against the insureds while their policy was in effect. The second defining feature is that the insureds did not learn of the claim until after the policy expired. The third defining feature is that the insureds had no reason to anticipate the claim before they learned it had been filed. Accordingly, it was impossible to notify the insurer of the claim until after the policy had expired.
The majority writes, “To hold that the reporting requirement should be excused anytime that the claim was not discovered during the policy period is to essentially convert claims made policies into occurrence policies in those cases.” With this broad statement I agree. But it is a straw horse in this case. Here the issue is far narrower. The trial court ruled only that the reporting requirement should be excused if a claim was made but neither discovered nor reasonably foreseeable during the policy period. Only in such rare circumstances, according to her ruling, may a claims-made insured invoke the impossibility doctrine to excuse a late report.
The majority responds that “impossibility does not excuse nonperformance where the promisor has indicated an intent to assume the risk thereof.” With this broad statement I also agree. I disagree, however, with the majority’s assertion that the policy in this case is “plain and unambiguous” in assigning the risk of impossibility to the insured.
The flaw in the policy lies in its shifting and inconsistent usage of the term “claim.” At page one of the introduction, the insurer announces, “We’ve written this policy in plain, easy-to-understand English.” In a medical malpractice liability policy, the plain, easy-to-understand, English meaning of “claim” is an injured person’s liability claim against the insured. The policy itself repeatedly employs this common usage, which I will refer to as “usage one.” To take two examples:
This agreement provides protection against professional liability claims which might be brought against you in your practice as a physician.
Each person limit. This is the most we’ll pay for all claims resulting from the injury or death of any one person.
Emphasis added.
The policy also attempts, however, to detach the word “claim” from common usage and assign it a special meaning, which I will call “usage two”. In a section emphasized by the majority, the policy provides:
When is a claim made?
A claim is made on the date you first report an incident or injury to us or our agent. You must include the following information:
• Date, time and place of the incident.
• What happened and what professional service you performed.
• Type of claim you anticipate.
• Name and address of injured party.
• Name and address of any witness.
Emphasis added.
In this section, the policy attempts to redefine “claim” as the insured’s report to the insurer. The policy writers, however, cannot confine themselves to their rarified usage two. Instead, irresistibly, they slip back to usage one, as in the very redefinitional section just quoted, which speaks of the insured’s obligation to report the “type of claim you anticipate.” Thus, their redefinition itself depends on the more common usage as a component: a “claim” is a report of a made or potential claim.
Elsewhere in the policy, the writers wholly ignore their redefinition and speak plainly and differentially of a report and a claim made, confining the latter term to usage one. *458In the section describing the insured’s reporting obligation, the policy provides:
Tell us or our agent what happened as soon as possible. Do this even though no claim has been made but you or another protected person is aware of having done something that may later result in a claim.
******
If Professional Hospital Liability Protection—Claims Made is included in this policy, we won’t consider a “Patient Incident Report” or “Variance Report” to be your report of a claim made—even if you send it to us or one of our agents.
Emphasis added. In these sections, the policy actually achieves the “plain, easy-to-understand English” that it promises: a claim made against the insured is one thing; the insured’s “report of a claim made” is another.*
Keeping the clarity of this distinction in mind—one, I reiterate, that the policy writers themselves were forced to use in order to write intelligibly—I’ll turn to the letter by which St. Paul attempted to warn its insured what it would risk by terminating the policy without tail coverage. That letter reads as follows: ’
This is a “claims made” form of coverage. This means you do not have coverage for claims arising out of acts performed prior to the termination for which a claim may be made after the termination date, unless you purchase reporting endorsement coverage.
Reporting endorsement coverage extends the time in which a claim may be made for acts which occurred before the termination date____
You may not need this endorsement extension if you have obtained a replacement policy providing coverage for prior acts. IF YOU DO NOT PURCHASE THE OPTIONAL REPORTING ENDORSEMENT WITHIN THE TIME PERIOD STATED IN YOUR POLICY, OR IF YOU DO NOT OBTAIN COVERAGE UNDER A REPLACEMENT POLICY, THEN YOU DO NOT HAVE COVERAGE FOR CLAIMS ARISING OUT OF ACTS PERFORMED PRIOR TO THE TERMINATION DATE FOR WHICH A CLAIM MAY BE MADE AFTER THE TERMINATION DATE.
This letter, the most significant part of which St. Paul capitalized for emphasis, is helpful and instructive as far as it goes. Conspicuous by its absence, however, is the following additional warning (paraphrasing St. Paul’s own language) that would have made a difference in this case:
Further, if you do not purchase the optional reporting endorsement within the time period stated in your policy, or if you do not obtain coverage under a replacement policy, then you do not have coverage for claims that you have not discovered and, reported to us prior to the termination date, even if those claims were made against you prior to the termination date and arise out of acts performed prior to the termination date.
To conclude, I would agree with the majority that this insurer had assigned the risk of impossibility to its insured if the policy writers, without blurring the clear distinction between a claim and a report, had plainly and unambiguously informed the insured that the policy applied only to claims or potential claims that were reported to the insurance company during the policy period, whether or not those claims were made during the policy period. Likewise, I would agree with the majority that this insurer had assigned the risk of impossibility to its insured if, in its termination letter, the insurer had plainly and unambiguously informed the insured that, if tail coverage were rejected, the policy would not apply to claims that were not reported during the policy period, even if, during the policy period, those claims had been made against the insured. Here, however, the policy was confusing and the termination letter misleading on this critical *459point. For that reason, I would uphold the trial court’s decision to apply the impossibility doctrine in this case, and I respectfully dissent from the majority decision to reverse.

 Without belaboring the policy further, by my count it employs the word "claim” nine times to refer to an injured person's liability claim against an insured; three times to refer to an insured's property damage claim against the insurer; once in the redefinitional section to define a claim made as the report that a liability claim has been made or may be made; and twice ambiguously in a way that might describe either the liability claim or the report.