A California appellate court has held that a written request for medical records did not constitute a “claim” within the meaning of a claims-made liability policy. Signature Healthcare Services, LLC v. Certain Underwriters at Lloyd’s, London, 2014 WL 3404966 (Cal. Ct. App. July 14, 2014).
An insurer issued a combined general and professional liability policy that covered the operations and management of a hospital for the claims-made policy period of September 8, 2007 to September 8, 2008. The policy defined “claim” as “a written demand for Damages, money or services that is received by an Insured, including a Suit.”
A 14-year-old patient at the insured hospital allegedly was raped by another patient on August 2, 2008. Three weeks later, on August 28, the hospital received a written request from a professional copying service to copy the minor’s medical records, which the hospital’s independent insurance adjuster forwarded to the insurer on either September 8 or 11, 2008. Meanwhile, on September 3, 2008, the independent insurance adjuster also forwarded to the insurer information regarding the alleged rape as well as a “Loss Advice Form” regarding the incident. On January 29, 2009, the hospital received written notice from counsel for the minor that she intended to sue and that she would seek damages. The minor later filed a complaint against the hospital on July 24, 2009. The insurer denied coverage for the suit on the grounds that the matter was not a claim first made during the policy period because the claim was first made on January 29, 2009, when the insurer received the written notice of intent to sue, and the policy did not provide for the reporting of potential claims.
In the ensuing coverage litigation, the hospital asserted that the Loss Advice Form, sent together with information regarding the incident, as well as notice to the insurer that the hospital had received a request for medical records were communications that constituted “claims.” The insured argued that the definition of “claim” must be read in conjunction with the policy’s notice provision, which required the submission of a “Loss Advice Form.” The Loss Advice Form in turn included a section titled “Basis for Reporting,” which listed, among other items that the insured could select as the basis for reporting, “request for medical records” and “unexpected outcome.” Accordingly, the hospital asserted that the inclusion of these categories on the Loss Advice Form indicated that the definition of “claim” included unexpected outcomes and medical records requests.
The appellate court noted that the Loss Advice Form did not use the word “claim” or provide that a “medical record request” or “unexpected outcome” constituted a claim. As such, the hospital’s proposed interpretation would render the definition of “claim” nugatory and nullify the policy’s coverage provision, which conditioned coverage on a “claim” as defined in the policy. The court also rejected the argument that the request to copy the minor patient’s medical records was a written demand for services with respect to the alleged rape because a hospital is statutorily prohibited from copying medical records pursuant to a request from a professional copy service. The court also pointed out that the request made no reference to the alleged rape.
Additionally, the court rejected the hospital’s argument that the insurer’s failure to respond to the Loss Advice Form and communications regarding the medical records request waived the insurer’s right to deny coverage. The court concluded that, because these communications did not constitute claims, the insurer had no obligation to accept or deny coverage.