The Louisiana Court of Appeals has held that a claims-made policy affords coverage for a lawsuit filed before the policy period because an amended complaint alleging a new legal theory was filed during the policy period. Billeaudeau v. Opelousas Gen. Hosp. Auth., 2018 WL 1835510 (La. Ct. App. Apr. 18, 2018). The court also rejected the insurer’s late notice, prior notice, and bodily injury exclusion arguments.
In 2013, the insured hospital was sued by parents of a patient for medical malpractice. In 2015, the plaintiffs sought and obtained leave to amend their complaint to add a standalone claim for negligent credentialing of the emergency room physician. The hospital reported the claim to its management liability insurer a few days later. The insurer denied coverage and prevailed in the ensuing coverage litigation. The hospital appealed.
The appellate court rejected the insurer’s arguments that the claim was first made before the policy period and not timely noticed. It held that the negligent credentialing claim did not become a cognizable claim until 2015 and therefore was made and noticed during the policy period. The court stated that “[a]lthough the operative facts were the same as presented in the [initial] petition, those facts were not recognized as giving rise to a legally separate cause of action in negligence until the [plaintiffs] presented the issue and the trial court weighed in.” The insurer also cited a prior notice exclusion barring coverage for claims reported under any policy which the policy “succeeds in time” because the hospital gave notice under an earlier medical malpractice policy. According to the court, however, the management liability policy was “not a policy that was meant to or in fact designed to ‘succeed in time’” the medical malpractice policy because the policies offered different coverages.
Finally, the court held that the bodily injury exclusion was not a complete bar to coverage. Even though the exclusion precluded coverage for claims “arising from” bodily injury, the court opined that the exclusion would not apply to damages for mental anguish and emotional distress.