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Rushdan v. Baringer8/30/2001
JUDGMENT: AFFIRMED.
Defendant-appellant, Ohio Insurance Guaranty Association ( OIGA ), appeals the decision of the Cuyahoga County Common Pleas Court that found plaintiff-appellee, Regina Rushdan ( Rushdan ) entitled to recover an additional $300,000 from OIGA under an excess or umbrella policy of insurance issued to defendant, David Baringer, M.D. ( Baringer ) after Baringer's professional liability insurer became insolvent. For the reasons that follow, we affirm.
A review of the record reveals that Rushdan filed an action for medical malpractice against Baringer in January 1997. At the time of the suit, Baringer was insured by Physicians Insurance Exchange Mutual Insurance Company ( PIE ), which provided coverage in the amounts of $1,000,000 per claim/$3,000,000 in the aggregate under a primary policy of insurance and $1,000,000 under an excess policy. In 1998, PIE was declared insolvent and ordered into liquidation by the Franklin County Common Pleas Court. Under the Ohio Insurance Guaranty Act (the Act ), codified at R.C. Chapter 3955, OIGA assumed the defense of the claims against PIE insureds such as Baringer.
In August 1999, a partial settlement agreement was reached between OIGA and Rushdan wherein it was stipulated that the value of Rushdan's claims against Baringer totaled $1,300,000.00. Rushdan thereafter agreed to accept OIGA's offer of $300,000, its statutory limit according to R.C. 3955.01(D)(2)(b), plus a Class 2 claim in the amount of $1,000,000.00. Rushdan, nonetheless, continued to maintain that she had a second covered claim under Baringer's excess policy and was therefore entitled to an additional payment of $300,000 from OIGA. As a result, Rushdan contemporaneously amended her complaint to include OIGA as a new- party defendant and added a claim for declaratory relief seeking a declaration to that effect.
Rushdan and OIGA filed cross-motions for summary judgment. In its opinion granting Rushdan's motion and denying OIGA's, the trial court concluded that Rushdan did indeed have two covered claims based not only on the language of the policies at issue but the very nature and purpose of excess insurance.
It cannot be doubted that but for the P.I.E. insolvency, [Rushdan] would have pursued two claims, one against Dr. Baringer's Primary Policy and one against the Excess Policy. Or, looking from P.I.E.'s perspective, the $1.3 million settlement would have been paid pursuant to both of Dr. Baringer's policies, the Primary up to $1 million, and the Excess for the remaining $300,000. If two claims would have existed but for P.I.E.'s insolvency, two covered claims exist pursuant to the Act. Therefore, [Rushdan] is entitled to a second $300,000 payment from OIGA.
In finding as such, the court dismissed OIGA's argument that Rushdan is not entitled to recover under the excess policy because she only received $300,000 and not the $1 million limit under the primary policy.
While OIGA's arguments may appear logical on their face, they fail because they ignore the statutory requirement that the OIGA assume all obligations of the insurer, to the extent of covered claims, as if the insurer had not become insolvent. R.C. 3955.08(A)(2). The fallacy of OIGA's position lies in the fact that the OIGA is seeking to construe the provisions of the Excess Policy in light of P.I.E.'s insolvency. This it cannot do. The OIGA must assume all of the obligations created under the provisions of the Excess Policy, to the extent of their status as covered claims, as if P.I.E. had not become insolvent. In other words, the OIGA must meet P.I.E.'s obligations under the Excess Policy as if the full limits of the Primary Policy had bee
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