Goodwin enters $3.5M judgment for CAMC

By Jessica M. Karmasek | Jul 20, 2011

Goodwin CHARLESTON -- A federal judge has entered a $3.5 million judgment in favor of Charleston Area Medical Center Inc.

Goodwin

CHARLESTON -- A federal judge has entered a $3.5 million judgment in favor of Charleston Area Medical Center Inc.

CAMC purchased an insurance policy from National Union Fire Insurance Co., including, but not limited to, directors and officers liability coverage for the period of May 1, 2008 through May 1, 2009.

On or about Oct. 20, 2008, CAMC notified National Union and AIG Domestic Claims Inc. -- both defendants in the case -- of three potential claims involving a CAMC employee.

CAMC informed National Union and AIG Domestic that claims were being filed on behalf of the patients, and the hospital requested coverage and a defense under the terms of its policy.

The patients alleged as part of their claims that CAMC had committed negligent hiring and/or negligent retention and/or negligent supervision, which they alleged caused their damages.

National Union and AIG Domestic disclaimed the coverage of one patient, after which CAMC agreed to mediate the claims of two of the patients, reaching a full and complete settlement with both.

Following the hospital's settlement with the two patients, AIG Domestic reiterated it was denying coverage for the one patient's claim.

CAMC honored its settlement agreements with the two patients and paid the settlement proceeds on or about March 18, 2009.

In its suit against the insurers, CAMC alleged they breached their contract in failing to provide coverage and a defense for the claims of the two patients, and for failing to acknowledge coverage and a defense for the third potential claim.

The insurers, the hospital alleged, also breached the implied covenant of good faith and fair dealing.

In its third count, CAMC said the insurers also violated West Virginia insurance regulations and standards.

The hospital, in its fourth count, argued that punitive damages were warranted. In court documents, they described the insurers' actions as "willful," "wanton" and "malicious."

Last month, lawyers for CAMC and the insurers attended a pre-trial conference.

Prior to the meeting, the U.S. District Court for the Southern District of West Virginia had entered a partial summary judgment order in favor of CAMC with respect to its breach of contract claim against National Union.

At the June 9 pre-trial conference, the parties told the court that they agreed on the damages to be awarded pursuant to the judgment for breach of contract; for the dismissal of CAMC's claims of common law bad faith and statutory bad faith; for the dismissal of CAMC's claims for punitive damages; and for the dismissal of AIG Domestic as a party defendant.

In his order Monday, U.S. District Judge Joseph R. Goodwin entered final judgment in favor of CAMC and against National Union in the amount of $2.05 million for reimbursement of the hospital's settlement of the underlying claims; $20,000 for reimbursement of CAMC's attorney fees incurred in its settlement; and $20,000 in expenses incurred in the lawsuit.

Another $683,333.33 was awarded to CAMC, representing attorney fees; $330,750 for statutory interest; and $395,916.67 for "annoyance, aggravation and inconvenience."

Goodwin also agreed to dismiss the hospital's claims of common law bad faith, statutory bad faith and punitive damages, and to dismiss AIG Domestic as a party defendant.

Wheeling attorneys Robert P. Fitzsimmons and Robert J. Fitzsimmons represented CAMC in the case.

Robert P. Fitzsimmons said Wednesday, "We are very happy with the summary judgment. Thankfully our judicial system can still compel multi-million/billion dollar insurance companies, who take our hard earned premiums dollars, to honor the promises they make in their insurance policies."

Co-counsel Robert J. Fitzsimmons agreed.

"Far too frequently insurance companies sell insurance to provide coverage but when a claim occurs they attempt to use the policy to escape their responsibility," he said.

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