Notice by One Insured Does Not Satisfy Notice Requirement for Different Insured

The Ohio Court of Appeals, applying Ohio law, has held that a medical malpractice insurer correctly denied coverage where the insured did not provide notice of the claim until after the policy expired even though the insurer had actual knowledge of the claim from another insured.  Wright State Physicians, Inc. v. The Doctors Company, 2016 Ohio App. LEXIS 5183 (Ohio Ct. App. Dec. 23, 2016).

The insurer issued separate claims-made medical malpractice policies to a physicians group and a medical center.  Each policy provided that a claim would only be covered if the incident took place before the policy expiration date and if the insurer “receives a Claim Report from you during this Policy Period.”  In December 2009, an attorney sent a letter to the medical center alleging malpractice by a member of the physicians group while providing services at the medical center.  The medical center tendered the claim to the insurer within the policy period.  It also forwarded the letter to the physicians group.  The physicians group, however, did not tender the claim to the insurer until after the policy period expired.

The insurer denied coverage for the physicians group on late notice grounds and the physicians group sued.  The parties agreed that the only ground for denial was the insureds’ failure to provide proper notice.  The insureds appealed after the trial court granted summary judgment to the insurer.

The appellate court agreed that the insureds’ late notice barred coverage.  The court noted that the insurer had been apprised of the malpractice claim by its other insured, the medical center.  However, the court held that, under the language of the policy, the physicians group needed to provide its own notice of the claim under its policy.  The court ruled that notice provisions are “conditions precedent” and have particular importance in claims made policies so that insurers can define their scope of liability.  The court reasoned that the policy imposed on the insured the duty to notify the insurer about the claim in writing, and it would be contrary to this intent to enable “an unrelated party” to satisfy the notice requirements on behalf of the insureds.  Therefore, even if the insurer had actual notice of the claim through another policy, the insureds’ failure to provide notice barred their claim for coverage.