American Continental Insurance v. PHICO Insurance , 132 N.C. App. 430 ( 1999 )

Judge Horton

dissenting.

The dispositive question before us is whether a “claim” was made against PHICO under its “claims-made” professional liability insurance policy. The PHICO policy defines “claim” in subsection (1) as an “express demand for damages.” There is no contention that subsection applies here. Subsection (2) deals with a situation in which the insured hospital reasonably anticipates a claim for damages. I agree with the majority that the standard is subjective, and that we must examine the testimony of the hospital’s risk manager, Ms. Chapman, to determine whether Ms. Chapman, on behalf of the insured, had a reasonable belief that a suit would be filed in the Watson case. I believe that Ms. Chapman did not have such a reasonable belief, and was merely filing a notice of claim with PHICO as a “precautionary” measure, as she described her action. The most telling statement by Ms. Chapman was contained in her letter of 13 October 1994 to PHICO, folio-wing the institution of an action by the Watsons against the hospital: “I had no idea that the enclosed case was being considered for litigation at that time [i.e., when she sent the notice of claim to PHICO on 26 September 1994], simply that the records had been requested [by an attorney].” (Emphasis added.) The PHICO policy specifically provides that “[a]n event reported by the insured to PHICO as part of risk management or loss control services shall not be considered a report of claim.” The weight of the evidence shows that Ms. Chapman’s “precautionary” report of claim was merely a “part of risk management,” and was not based on a reasonable belief that a demand for damages against the insured would result from the attorney’s request for records.

I respectfully dissent, therefore, from the majority opinion, and would reverse and remand the case for entry of judgment finding that the PHICO policy did not provide coverage of the claim in question, and that the ACIC policy did provide such coverage.