Connecticut Insurance Guaranty Association v. Joshua Drown, ppa Susan Drown et al. (2010)

MEMORANDUM OF DECISION

I

PROCEDURAL BACKGROUND

The parties in this action are the plaintiff, Connecticut Insurance Guaranty Association (CIGA) and the defendants, Joshua Drown, ppa Susan Drown and Rodney Drown, Susan Drown and Rodney Drown individually and Associated Women's Health Specialists, P.C. (Associated).¹  The defendant Associated is a professional corporation organized and existing under the laws of the State of Connecticut, which provides obstetrical and perinatal care and services in Waterbury, Connecticut.   From 2000 through 2001, the defendant Associated was insured through a professional liability insurance policy issued by Medical Inter-Insurance Exchange (MIIX).   In April 2008, MIIX was declared insolvent and pursuant to General Statutes § 38a-836, the plaintiff CIGA became liable for covered claims arising out of MIIX's policies.

The plaintiff CIGA brought the present declaratory action on March 17, 2009, pursuant to General Statutes § 52-29, to resolve a controversy concerning the rights and obligations of the parties under General Statutes § 38a-838(5) with respect to certain claims arising out of a complaint filed by the Drowns as against the defendant Associated and others in 2000.   On June 23, 2009, the plaintiff CIGA moved for summary judgment on its declaratory judgment complaint and sought a declaration by the court that CIGA is not obligated to the defendant Associated for the claims asserted by the Drowns in the underlying action because of Exclusion (i) in the MIIX Policy.   On March 22, 2010, the defendants cross-moved for summary judgment as to all counts of the plaintiff's complaint, dated February 4, 2009, and the defendants' counterclaims dated June 1, 2009.   The defendants sought a declaration from the court that the MIIX Policy at issue provides coverage to the defendant Associated for the medical malpractice claims asserted by the Drowns in the underlying action and that CIGA is statutorily obligated to pay three “covered claims” to the defendant Drowns, pursuant to General Statutes § 38a-838(5), in the total amount of $1,199,700.   Opposition briefs were filed by all parties, along with reply briefs and sur-reply briefs.

On August 10, 2010, oral argument was heard on the plaintiff's motion for summary judgment and the defendants' cross motion for summary judgment.

II

FACTUAL BACKGROUND

On May 2, 2000, the defendant Joshua Drown, a minor, and his parents the defendants Rodney and Susan Drown, filed a medical malpractice action against Dr. Frances Bourget, Dr. Richard Holden and their medical group, the defendant Associated, in Connecticut Superior Court (hereinafter referred to as “underlying action.”)   In the underlying action, the Drowns alleged that Drs. Holden and Bourget, and their group Associated, failed to recognize a placental abruption resulting in brain damage to the infant Joshua Drown and physical injuries to the defendant Susan Drown.   Counts One, Two and Four of the Drowns' complaint in the underlying action stated negligence claims against the defendant Associated.   The Drowns alleged in the underlying action that the defendant Associated was vicariously liable for the actions of two doctors Dr. Richard Holden and Dr. Frances Bourget, who were physicians employed in the defendant Associated's practice.   The underlying action ended in a default being declared against Associated and a stipulated judgment was entered into between the parties.

During the time period alleged in the original complaint, the defendant Associated was insured under the MIIX Policy issued by MIIX Insurance Company.  (Declaratory Judgment Complaint ¶ 17.)   The MIIX Policy provided coverage for the policy period beginning January 1, 2000, and ending January 1, 2001.  (Declaratory Judgment Complaint ¶ 18.)   There is no dispute in this action that the defendant Associated turned these claims over to MIIX in a timely manner in 2000.

There is also no dispute that MIIX did not provide any reservation of rights at the commencement of the action.   In fact, MIIX provided counsel to defend the action and affirmatively stated that the corporate policy at issue was providing $2 million in coverage to the defendant Associated for the claims made by the defendant Drowns as a result of the actions of Drs. Holden and Bourget.  (Ex. B to Defendant's Cross Motion for Summary Judgment.)   It is further undisputed that the first time it denied coverage of the claims at issue was six years later on October 11, 2006, shortly after MIIX failed to participate in a September 28, 2006, pre-trial mediation scheduled by the court.

On October 11, 2006, MIIX sent a letter to the defendant Associated wherein it stated its position for the first time that Exclusion (i) in the policy at issue precluded coverage for the defendant Associated for its vicarious liability for the acts of individual physicians.  (Exhibit L Defendants' Cross Motion for Summary Judgment.)   Although MIIX agreed to continue to provide a defense to the defendant Associated in the underlying action it failed to do so.   On December 7, 2006, a second court ordered mediation was held in the underlying action and MIIX failed to attend or send counsel.   Consequently, a default was entered against the defendant Associated shortly after the second mediation.   A motion to set aside default was denied and the defendant Associated settled with the Drowns on March 21, 2007, by stipulating to pay the amount of the MIIX policy, $2 million, and the Drowns agreed not to proceed directly against Associated's assets.  (Defendant's Cross Motion for Summary Judgment p. 9.)

On April 9, 2008, a United States Bankruptcy Court in New Jersey declared MIIX insolvent and ordered that MIIX be liquidated.  (Declaratory Judgment Complaint ¶ 19.)   By reason of the determination of insolvency of MIIX, the plaintiff CIGA became obligated to pay certain “covered claims” arising out of and within the coverage of the MIIX Policy pursuant to General Statutes § 38a-836, et seq.

The MIIX policy at issue is titled:  “Physicians' & Surgeons' Professional Liability Insurance Claims -Made.” The portions of the MIIX Policy that are relevant to this action include the following:

I.  Coverage Agreements

The company will pay on behalf of the insured all sums that the insured shall become legally obligated to pay as damages because of:

Coverage A -Individual Professional Liability

Injury arising out of the rendering of or failure to render, on or after the retroactive date, professional services by any individual insured, or by any person for whose acts or omissions such insured is legally responsible, except as a member of a partnership;

Coverage B-Corporate/Partnership Liability

Injury arising out of the rendering of or failure to render, on or after the retroactive date, professional services by any person for whose acts or omissions the corporation/partnership insured is legally responsible.

II. EXCLUSIONS

This insurance does not apply to liability of the insured:

(i) corporation/partnership under Coverage B with respect to injury arising solely out of the acts or omissions in the rendering or failure to render professional services by individual physicians or nurse anesthetists, or by any paramedical for whom a premium charge is shown on the declarations page.

VI. DEFINITIONS

“Professional services” means services requiring specialized knowledge and mental skill in the practice of the profession described in the declarations page, and includes service by a person while acting within the scope of his duties, as a member of:

(a) A board of directors of a hospital, but only with respect to board performance of any function described in (c), (d), or (e) below;  (b) a professional standards review organization, health systems agency, statewide health coordinating council or health care administration board established by law;

(c) a duly constituted hospital or long term health care facility utilization review committee;

(d) a duly constituted hospital medical staff committee for the evaluation and improvement of the quality of care;

(e) a duly constituted hospital or medical society peer review committee having responsibility for (I) reviewing qualifications and credentials of persons seeking appointment or reappointment to a hospital medical staff, (ii) evalutating the clinical or administrative competence of persons so appointed, (iii) matters concerning limiting the scope of hospital privileges or persons on a hospital medical staff, or (iv) matters concerning the dismissal or discharge of persons from a hospital medical staff;  or (f) any peer review program conducted by the Company.

Professional services shall not include duties performed in connection with managed care services.

VIII. CONDITIONS OF INSURANCE

(c) Other Coverage.  “This insurance provides primary insurance for any claim that is based upon, or arises out of, the rendering of or failure to render professional services in treatment, diagnosis and consultation ․ (g) Insurance for Others Required.   The coverage provided under this policy shall not apply to any individual, partnership or corporation insured with respect to claims arising out of the acts or omissions of:  a) physician or nurse anesthetist employees of an individual, partnership, corporation insured, or (b) members of an insured partnership or officers, directors or shareholders of an insured corporation, unless such persons have individual coverage for such claims at the time they are made under a physician's and surgeons' or similar professional liability insurance policy with limits of liability equal to or greater than the limits of liability of the insured under this policy.

III

DISCUSSIONA. Summary Judgment

The plaintiff has moved for summary judgment on its declaratory judgment complaint and seeks a declaration by the court that CIGA is not obligated to the defendant Associated for the claims asserted by the Drowns in the underlying action because of Exclusion (i) in the MIIX Policy.   The defendants have cross-moved for summary judgment on all counts of the plaintiff's complaint dated February 4, 2009, and defendants' counterclaims dated June 1, 2009.   The defendants seek a declaration from the court that the MIIX Policy at issue provides coverage to the defendant Associated for the medical malpractice claims asserted by the defendants Drowns in the underlying action and that CIGA is statutorily obligated to pay three “covered claims” to the defendant Drowns, pursuant to General Statutes § 38a-838(5) in the total amount of $1,199,700.

“Practice Book § 17-49, provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  (Internal quotation marks omitted.)  Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007).  “[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way ․ [A] summary disposition ․ should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party ․ [A] directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed.”  (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791, 815, 830 A.2d 752 (2003).

“[T]he genuine issue aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred ․ A material fact has been defined adequately and simply as a fact which will make a difference in the result of a case.”   (Citations omitted;  internal quotation marks omitted.)  Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).

“In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact.   The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all material fact, which, under applicable principles of substantive law, entitle him to judgment as a matter of law.   The courts hold the movant to a strict standard.   To satisfy his burden, the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ․ As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent ․ When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue ․ Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ․ It is not enough, however, for the opposing party merely to assert the existence of a disputed issue.   Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45].”  (Internal quotation marks omitted.)   Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006).  “In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist.”  Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988).   The court may address the merits of a declaratory judgment action upon a motion for summary judgment.  United States Automobile Assn. v. Marbury, 46 Conn.App. 99, 102, n.3, 698 A.2d 919 (1997).

B. Interpretation of MIIX Policy

On April 9, 2008, a United States Bankruptcy Court in New Jersey declared MIIX insolvent and ordered that MIIX be liquidated.  (Declaratory Judgment Complaint ¶ 19.)   By reason of the determination of insolvency of MIIX, the plaintiff CIGA became obligated to pay certain “covered claims” arising out of and within the coverage of the MIIX Policy pursuant to General Statutes § 38a-836, et seq.  General Statutes § 38a-838(5) provides in relevant part, that a “[c]overed claim means an unpaid claim, including but not limited to, one for unearned premiums, which arises out of and is within the coverage and subject to the applicable limits of an insurance policy to which sections 38a-836 and 38a-853, inclusive, apply ․” “In general, the legislative objective was to make the [association] liable to the same extent that the insolvent insurer would have been liable under the policy.”  Connecticut Insurance Guaranty Assn. v. Union Carbide Corp., 217 Conn. 371, 390, 585 A.2d 1216 (1991).

The plaintiff CIGA has argued in this case that it is not liable pursuant to General Statutes § 38-385(5) because the claims at issue are not “covered claims” as defined by the statute.   Plaintiff CIGA contends that because the defendants' claims in the underlying action were excluded by Exclusion (i) there is no coverage for Associated under the MIIX policy.   The plaintiff CIGA further argues that because there is no coverage for Associated under the MIIX policy, there is no “covered claim” as such term is defined by the CIGA act and CIGA cannot pay a claim that is not a “covered claim.”   The defendants contend that their claims are not excluded by Exclusion (i) and that the claims are “covered claims.”

“It is the function of the court to construe the provisions of a contract of insurance ․ The [i]nterpretation of an insurance policy ․ involves a determination of the intent of the parties as expressed by the language of the policy ․ [including] what coverage the ․ [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy ․ [A] contract of insurance must be viewed in its entirety, and the intent of the parties for entering it derived from the four corners of the policy ․ [giving the] words ․ [of the policy] their natural and ordinary meaning ․ [and constructing] any ambiguity of the terms ․ in favor of the insured ․” (Citation omitted;  internal quotation marks omitted.)   Connecticut Insurance Guaranty Assn. v. Fontaine, 278 Conn. 779, 784-85, 900 A.2d 18 (2006), citing Hartford Casualty Ins. Co v. Litchfield Mutual Fire Ins. Co., 274 Conn. 457, 462-63, 876 A.2d 1139 (2005).

The MIIX policy at issue has three different coverage parts:  Coverage A, the “Individual Professional Liability” part of the policy;  Coverage B, the “Corporate/Partnership Liability” part of the policy;  and Coverage C, the “Paramedical Employee Liability” part of the policy.  (Ex. W Defendant's Cross Motion for Summary Judgment.)   On the declarations page of the policy, Associated is listed as an insured under Coverage B, Corporate/Partnership Liability.   Coverage B covers Associated for “[i]njury arising out of the rendering of or failure to render ․ professional services by any person for whose acts or omissions the corporation/partnership insured is legally responsible.”   In the MIIX Policy, “Professional Services” means services requiring specialized knowledge and mental skill in the practice of the profession described in the declarations page, and includes service by a person while acting within the scope of his duties.

The court starts its ambiguity inquiry with an examination of the language contained in Exclusion (i).   Exclusion (i) provides:

corporation/partnership under Coverage B with respect to injury arising solely out of the acts or omissions in the rendering or failure to render professional services by individual physicians or nurse anesthetists, or by any paramedical for whom a premium charge is shown on the declarations page.

The plaintiff claims that the basis for defendants' claim for coverage in the Amended Revised complaint under Coverage B arises solely out of the acts or omissions of Dr. Frances Bourget.   Plaintiff contends that Exclusion (i) excludes coverage for a claim against Associated that arises solely out of acts or omissions of any individual physician.  (Plaintiff's Mem. in Opposition to Cross Motion for Summary Judgment p. 4.) Plaintiff, however, claims that “[w]here an injury does not arise solely out of the acts or omissions in rendering professional services by such individuals, Exclusion (i) will not eliminate Coverage B.” (Id. 10.)

Plaintiff further argues that the phrase “for whom a premium charge is shown on the declaration page” in Exclusion (i) applies only to Associated's paramedicals and not to the individual physicians or nurse anesthetists also mentioned in the exclusion.   The plaintiff contends that is so because in Exclusion (i) the phrases “individual physicians” and “nurse anesthetists” are separated by the word “or,” the physicians/nurse anesthetists clause and paramedical clause each begin with the word “by” and the physician/nurse anesthetists clause is separated by a comma and the word “or,” from the phrase “any paramedical for whom a premium charge is shown” unambiguously modifies “any paramedical.”   Thus, CIGA argues that the language “for whom a premium charge is shown on the declaration page” does not relate or modify physician or nurse anesthetist in Exclusion (i) and it is only paramedicals for whom a premium charge must be shown on the declarations page for the exclusion to apply with respect to liability arising out of the acts or omissions of such paramedicals.   Thus, the plaintiff contends that Exclusion (i) applies to individual physicians whether or not a premium for such physician is shown on the declarations page.²

The defendants contend that the plaintiff's interpretation of Exclusion (i) not only negates the corporate coverage portion of the policy, but that this exclusion applies only to doctors for whom a premium charge is shown on the declaration page.   Defendants argue that since Dr. Bourget's name does not appear on the declaration page, this exclusion does not apply to her.   Moreover, the defendants contend that the plain language of the Coverage B, Corporate/Partnership Liability provides coverage for defendants' claims based on the negligence of Dr. Bourget.   Finally, the defendants contend that CIGA's argument essentially boils down to the proposition that because of Exclusion (i) there can never be corporate coverage provided by Coverage B based on the negligence of a physician in Associated's employ.

At oral argument on August 10, 2010, counsel for the plaintiff CIGA was asked specifically about this position-whether, in light of Exclusion (i) there can ever be corporate coverage provided by Coverage B that is based on the negligence of an individual physician employed by Associated.   Plaintiff's counsel argued that coverage would exist if the injury claimed did not arise solely out of the acts or omissions in rendering of professional services by an individual physician.   Counsel cited to the “solely” language contained in Exclusion (i) for the proposition that if the negligence claimed was “solely” the result of an act or omission of an individual physician employed by Associated, then Exclusion (i) would apply.   Plaintiff's counsel argued that if the physician was not “solely” the cause of the acts complained of, then Exclusion (i) would not apply.   Plaintiff's counsel was also asked if the Amended Revised Complaint upon which the claims are based-which alleges claims of negligence not only against Dr. Bourget, but Dr. Holden as well-changed plaintiff's position in this case.   Plaintiff's counsel argued that it did not and that the term “solely” as used in Exclusion (i) can mean the acts of multiple physicians that were employed by the defendant Associated.   At oral argument, the defendants disputed this interpretation of “solely” and contended that “solely” meant one, not multiple physicians.

The plaintiff CIGA finally argued that the language of Exclusion (i) is not ambiguous and the doctrine of contra proferentem is inapplicable.   The defendants conversely argued that the language in Exclusion (i) clause is ambiguous, that ambiguity is demonstrated by the two vastly different interpretations of the clause by the parties, and the doctrine of contra proferentem does apply.  “The fact that the parties advocate different meanings of the [insurance policy] does not necessitate a conclusion that the language is ambiguous.”  (Internal quotation marks omitted.)  Springdale Donuts, Inc. v. Aetna Casualty & Surety Co. of Illinois, 247 Conn. 801, 806, 724 A.2d 1117 (1999).  “Rather, insurance policy language is ambiguous if we determine that it is reasonably susceptible to more than one reading.”  (Internal quotation marks omitted.)  Connecticut Insurance Guaranty Assn. v. Fontaine, supra, 278 Conn. 786.  “[W]hen the words of an insurance contract are, without violence, susceptible of two [equally reasonable] interpretations that which will sustain the claim and cover the loss must, in preference be adopted ․ [T]his rule of construction favorable to the insured extends to exclusion clauses.”  (Citation omitted;  internal quotation marks omitted.)  Travelers Ins. Co. v. Namerow, 261 Conn. 784, 796, 807 A.2d 467 (2002);  see also Allstate Ins. Co. v. Barron, 269 Conn. 394, 406, 848 A.2d 1165 (2004).

The court concludes that the policy language in Exclusion (i) is ambiguous because the plaintiff CIGA reasonably reads this clause as limiting the insurer's obligation to pay damages, while the defendants adopt a reasonable, but more expansive reading of the policy language, which would encompass claims made against physicians employed by Associated.   Having concluded that the policy language is ambiguous, the court is free to apply the contra proferentem rule and consider extrinsic evidence.

“The premise behind the [contra proferentem] rule is simple.   The party who actually does the writing of an instrument will presumably be guided by his own interests and goals in the transaction.   He may choose shadings of expression, words more specific or more imprecise, according to the dictates of these interests ․ A further, related rationale for the rule is that [s]ince one who speaks or writes, can by exactness of expression more easily prevent mistakes in meaning, than one with whom he is dealing, doubts arising from ambiguity are resolved in favor of the latter.”  (Internal quotation marks omitted.)   Connecticut Insurance Guaranty Assn. v. Fontaine, supra, 278 Conn. 789, n.7, citing Israel v. State Farm Mutual Automobile Ins. Co., 259 Conn. 503, 508-09, 789 A.2d 974 (2002).   The policy reasons behind the contra proferentem rule is “more rigorously applied in the context of insurance contracts than in other contracts.”  Id. The Connecticut Supreme Court's “interpretation of ambiguous policy language in favor of coverage under the doctrine of contra proferentem has become near axiomatic in insurance coverage disputes.”   Connecticut Ins. Guaranty Assn. v. Fontaine, supra, 278 Conn. 789;  see also R.T. Vanderbilt Co. v. Continental Casualty Co., 273 Conn. 448, 465, 870 A.2d 1048 (2005).  “Courts in such situations often apply the contra proferentem rule and interpret a policy against the insurer.”  Metropolitan Life Ins. Co. v. Aetna Casualty & Surety Co., 255 Conn. 295, 306, 765 A.2d 891 (2001).

The court finds that the ambiguous language contained in Exclusion (i) should be construed in accordance with the reasonable expectations of the insured Associated when it entered into the contract.   There is no dispute that MIIX drafted the policy at issue and that by reason of MIIX's insolvency the plaintiff CIGA stands in the shoes of this insurer.   The title of the MIIX policy issued to the defendant Associated is “Physicians' & Surgeons Professional Liability Insurance-Claims Made.” Under Coverage B of the MIIX policy entitled “Corporate/Partnership Liability” it provides coverage to Associated for “[i]njury arising out of the rendering of or failure to render ․ professional services by any person for whose acts or omissions the corporation/partnership insured is legally responsible.”   It is clear that the reasonable expectation of the insured Associated was that it was going to be insured for injury arising out of the rendering of or failure to render professional services by any person for whose acts or omissions the corporation/partnership was legally responsible.   The purpose of the policy was to provide coverage to the corporate entity, Associated, for the acts or omissions of its physicians and other medical personnel.

Dr. Bourget was employed by the defendant Associated.   The plaintiff CIGA has conceded in this action that the actions of Dr. Bourget are “professional services” and that Dr. Bourget is a person for whose acts or omissions Associated is legally responsible.   Dr. Bourget is not listed on the declaration page of the MIIX policy and does not have individual coverage under the policy.   Additionally, Dr. Bourget was not the only doctor as to which claims were asserted in the Amended Revised Complaint in regard to the alleged injuries suffered by the defendants.   In the Amended Revised Complaint, very similar malpractice claims were asserted against Dr. Holden.   Accordingly, based on the allegations in the Amended Revised Complaint, Dr. Bourget was not solely the cause of the injuries claimed in the underlying action.   With respect to the plaintiff CIGA's argument that the term “solely” in Exclusion (i) can mean more than one physician employed by the defendant Associated, the court does not agree with this interpretation of the term “solely.”   The American Heritage Dictionary (4th Ed.2000), defines the term “solely” as “alone;  singly” and defines “sole” as “being the only one;  existing or functioning without another or others;  only.”   Thus, the exclusionary language that “insurance does not apply to the liability of the insured ․ with respect to injury arising solely out of acts or omissions in the rendering or failure to render professional services by individual physicians ․” is inapplicable in this case.

The plain language of Coverage B, Corporate/Partnership Liability provides coverage for defendants' claims based on the acts or omissions of Dr. Bourget.   The court reads the ambiguous language in Exclusion (i) in favor of extending insurance coverage, and concludes that the claims asserted by the Drowns in the underlying medical malpractice action against the defendant Associated for the acts and omissions of Dr. Bourget in the rendering of professional services are “covered claims” under the MIIX policy.

C. Failure to Insure Pursuant to General Statutes § 38a-851(a)

The defendants next argue that the plaintiff CIGA has failed to comply with General Statutes § 38a-851(a), which applies to “covered claims [that] arise from a judgment under any decision, verdict or finding based on the default of an insolvent insurer or based on such insolvent insurer's failure to defend an insured” and gives CIGA the right to “apply to have such judgment, order, decision, verdict or finding set aside” and defend the insured.  Connecticut General Statute § 38a-851(a).

The plaintiff CIGA argues that General Statutes § 38a-851(a) does not apply to it as there is no judgment against Associated in the summary judgment record and the settlement agreement attached to defendant's reply memorandum confirms there is no such judgment.   Defendants contend that the default entered against defendant Associated due to MIIX's failure to defend satisfies the judgment requirement.   The defendants argue that § 38a-851(a) specifically contemplates default judgments based on a failure to defend and specifically states that covered claims can arise from such default judgment.   The plaintiff CIGA has countered by arguing that even if the default judgment constitutes a judgment as a result of the failure to defend, § 38a-851(a) specifically pertains to covered claims arising from such judgment and it contends there is no such covered claim.   The defendants contend that the plaintiff CIGA should be required to pay the covered claims of the defendants that have arisen by virtue of MIIX's default.

In support of their position the defendants cite to Hall v. MPH Transp, Inc., 58 Pa. D. & C.4th 482, 484-505 (Pa.Com.Pl.2002), which denied the Pennsylvania Insurance Guaranty Association's (PIGA) motion to have a default set aside long after the four-month period of time prescribed by statute.   In denying the motion, the Pennsylvania court held that PIGA is “[t]o be deemed the insurer to the extent of its obligation on the covered claims and, to such extent, shall have all rights, duties and obligations of the insolvent insurer as if that insurer had not become insolvent.”  Id. The court in rejecting PIGA's argument that it had an automatic right to open default judgments against an insured caused by an insurer's default, concluded that the guarantee association “inherits both the feats and sins committed by the former insurer while solvent and reaps the benefits of the insurer's achievements, and suffers the consequences of its transgressions, during its solvency.”  Id. 490.   In Connecticut, our Supreme Court has similarly held that “[i]n general, the legislative objective was to make the [association] liable to the same extent that the insolvent insurer would have been liable under its policy.”   Connecticut Ins. Guaranty Assn. v. Union Carbide Corp., 217 Conn. 371, 390, 585 A.2d 1216 (1991);  see also Esposito v. Simkins Industries, Inc., 286 Conn. 319, 340, 943 A.2d 456 (2008).

The court has set forth above in this decision its findings that there are three covered claims that arose from the underlying action.   MIIX breached its duty to defend the defendant Associated, which resulted in a default being entered against defendant.   The plaintiff CIGA is liable to the same extent that MIIX would have been liable for breaching its duty to defend covered claims under its policy.

IV

CONCLUSION

Based on the foregoing, this court grants the defendants' cross motion for summary judgment and denies the plaintiff's motion for summary judgment.   The court declares (1) that the MIIX policy provides coverage to the defendant Associated Women's Health Specialists, P.C. for the claims asserted by Susan, Rodney and Joshua Drown in the underlying medical malpractice action;  and (2) pursuant to General Statutes § 38a-838(5) plaintiff CIGA is statutorily obligated to pay three “covered claims” to the Drowns in the total amount of $1,199,700.

BY THE COURT

OZALIS, J.

FOOTNOTES

FN1. The Court will refer to Joshua Drown, Susan Drown and Rodney Drown collectively as “the Drowns.”.  FN1. The Court will refer to Joshua Drown, Susan Drown and Rodney Drown collectively as “the Drowns.”

FN2. The court has reviewed the Massachusetts Insurers Insolvency Fund v. Mountzuris, Superior Court of Massachusetts, Worcester County, Docket No. 081962B (April 21, 2009) [25 Mass. L. Rptr. 469], case that plaintiff relies upon and does not concur with the conclusions reached by the court in that decision with respect to the interpretation of the language contained in Exclusion (i)..  FN2. The court has reviewed the Massachusetts Insurers Insolvency Fund v. Mountzuris, Superior Court of Massachusetts, Worcester County, Docket No. 081962B (April 21, 2009) [25 Mass. L. Rptr. 469], case that plaintiff relies upon and does not concur with the conclusions reached by the court in that decision with respect to the interpretation of the language contained in Exclusion (i).

Ozalis, Sheila A., J.