LEXINGTON INSURANCE COMPANY v.  

LEXINGTON HEALTHCARE GROUP, INC., et al., SC 18681/18682

Judicial District of Hartford

 

     Insurance; Whether Deaths and Injuries Resulting From a Nursing Home Fire Constitute One "Medical Incident" Under Insurance Policy; Whether Court Correctly Determined Total Amount of Available Coverage.  A fire, allegedly started by a patient at the Greenwood Health Center (Greenwood), caused the deaths of a number of patients and resulted in serious injuries to others. At the time of the fire, Greenwood and six other nursing homes were insured by a professional liability policy issued by Lexington Insurance Company (Lexington).  The declarations section provided that the limit for "Each Medical Incident" was $500,000 and that the "Aggregate Limit" was $1,000,000.  Further, section IV.B of the policy provided that "[t]he Aggregate Limit is the most we will pay for the sum of all damages under this Coverage Part."  After the estates and conservators of thirteen of the fire victims (underlying plaintiffs) filed negligence suits, Lexington brought this declaratory judgment action to resolve questions pertaining to the amount of coverage available under the policy.  Lexington moved for summary judgment, and the underlying plaintiffs and the property owner filed cross motions for summary judgment.  Lexington contended that under the policy's "continuous exposure" clause (CE clause), which provided that claims arising from "continuous, related, or repeated medical incidents shall be treated as arising out of one medical incident," the underlying plaintiffs' claims were "related" and constituted a single "medical incident."  The court, however, determined that the CE clause was ambiguous because "related" could be interpreted to mean either related services delivered to a number of patients or related services delivered to a particular patient.  Utilizing the doctrine of contra proferentem, which dictates that ambiguous language will be construed against the party that selected the language, the court adopted the latter interpretation and concluded that the CE clause did not combine the negligence claims of different underlying plaintiffs.  Accordingly, it ruled that there were thirteen separate "medical incidents" under the policy.  Next, Lexington argued that the claims of the underlying plaintiffs were subject to the aggregate limit which, under the policy's declarations section, was $1 million.  It maintained that the $10 million aggregate limit provided in an endorsement, which amended the policy, was meant to be a cap for all seven facilities covered under the policy rather than the aggregate limit for each facility.  Noting that section II.A of the endorsement states that the declaration aggregate amount in section IV.B "is deleted in its entirety and replaced" by the endorsement indicating that the aggregate limit is $10 million for each facility, the court concluded that the aggregate limit for Greenwood is unambiguously $10 million.  In these appeals, the Supreme Court will review the trial court's judgment.