Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, January 31, 2012

Insurer Not Required to Indemnify/Defend Firm in Malpractice Suit

GavelElla Mae Bates sought to qualify for Medicaid and hired the law firm of Davis & Associates to create a Medicaid qualifying trust for her.  The state denied Bates Medicaid benefits in 2007 because the trust was an available asset. The firm subsequently failed to timely file an appeal of denial. Bates sued the firm for malpractice in 2009.

Prior to the suit, the firm had purchased professional liability insurance form Westchester Fire Insurance Company. One of the firm’s policies covered April 1, 2007 to April 1, 2008 and another policy covered April 1, 2008 to April 1, 2009. The policy provided that the insured’s claims were covered as long as the firm had no reasonable basis for believing it breached a professional duty as of the inception date of the policy.

The insurer argued that the firm knew it breached its professional duty at the inception of the 2008-2009 policy and that the insurer was thus not obligated to indemnify and defend the firm. The law firm argued that the policy began in April 2007 and that the subsequent 2008-2009 policy was simply a renewal of the original policy.

In Davis & Associates v. Westchester Fire Insurance Co. (U.S. Dist. Ct., D. Colo. Jan. 24, 2011), the U.S. Court for the District of Colorado granted summary judgment for the insurer. The court held that the 2008-2009 policy was not a renewal of the 2007 policy and that the firm knew or had a reasonable basis to know that it had breached its duty to Bates in September 2007. As such, the court held that the insurer was not required to indemnify or defend the law firm during Bate’s malpractice suit.    

See Insurance Company Not Required to Indemnify Being Sued by Medicaid Applicant, ElderLawAnswers, Jan. 30, 2012.

https://lawprofessors.typepad.com/trusts_estates_prof/2012/01/insurer-not-required-to-indemnifydefend-firm-in-malpractice-suit.html

Disability Planning - Health Care, Elder Law, Malpractice, New Cases | Permalink

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