Successful Result for a Professional Liability Carrier in a Federal Case Involving Coverage and Bad Faith Claims

Dinsmore obtained a successful result for a professional liability carrier in a federal case involving coverage and bad faith claims. A Kentucky dentist allegedly lied to his patient that he had installed dental implants for her, and after she began to experience increased pain and called the dentist, she learned he had abandoned his practice and moved out of state. After racking up massive dental bills from another provider, her lawyer phoned the dentist’s carrier, but only provided the carrier his client’s name and did not specify damages were being sought or provide any details about the loss. Days later the policy terminated. When that information was provided several months later, the insurer denied the request for coverage, contending that the dentist himself had not reported a “claim” or “potential claim” consistent with the policy terms, nor had the claimant done so consistent with the policy’s reporting requirements. Thereafter, the patient obtained a nearly $500,000 default judgment for negligence against the dentist, and then sued MedPro to cover that judgment as well as for bad faith. Ultimately, a Kentucky federal district judge entered summary judgment in favor of the insurer, ruling that strict compliance with a claims made policy’s reporting policy was required under Kentucky law and that neither a “claim” (a written request for damages during the policy period) or “potential claim” (reporting all “reasonably available information” about the loss during the policy period) had been provided. As a result, the insurer was deemed to have no contractual duty to pay (a required element under Kentucky law for any bad faith claim), a summary judgment on the bad faith claim was also entered. The district court’s orders were recently upheld in a unanimous decision by the Sixth Circuit Court of Appeals.