Steele v. Healthcare Prof'l. Ins. Co.

The following papers, filed on NYSCEF, have been read and considered on Defendant Healthcare Professionals Insurance Company’s (“HPIC”) motion to dismiss Plaintiff’s complaint pursuant to CPLR §3211, which the Court converted to a motion for summary judgment: In support of the motion:      Doc ## 23 through 27; In opposition to the motion:                       Doc ## 30 through 38; In reply: Doc ## 39 through 40; In further support of the motion:           Doc ## 42 through 46; In further opposition to the motion:    Doc ##47 through 49; and In further reply:     Doc # 50. DECISION AND ORDER BACKGROUND Plaintiff, Christine Steele (“Steele” or “Plaintiff”), is one of 255 individuals who previously brought suit against Defendant Spyros Panos, M.D. (“Panos”), an orthopedic surgeon, arising from medical treatment rendered by him during the period 2004 through 2011. Collectively, the actions against Panos came to be referred to as the “Panos Litigation.”¹ Steele alleged that she suffered medical malpractice at the hands of Panos on February 23, 2010. As a result, she filed suit against Panos on November 16, 2011. (NYSCEF Doc # 1, Dutchess County Index # 1312/2011). Medical Liability Insurance Company (“MLMIC”), which provided Panos with the first layer of professional liability insurance, defended the action pursuant to a claims-made insurance policy which covered claims made in 2011. After extensive discovery and delay caused by various factors, including the number of claims, Panos’ incarceration and his refusal to consent to settle,² the claims proceeded to alternative dispute resolution pursuant to an Arbitration Agreement dated December 21, 2017 (“the Agreement”). All 255 plaintiffs, MLMIC and HPIC,³ which provided Panos with the first layer of excess insurance coverage,⁴ entered into the Agreement. The Agreement was subsequently So Ordered by the Court. The Agreement and Judgments The Agreement provided for all cases to be resolved by the chosen arbitrator, the Hon. Peter B. Skelos (Associate Justice, Appellate Division, Second Department, ret.). As prescribed by the Agreement, Justice Skelos applied a matrix under which he allotted points to each individual plaintiff, based on the nature, type and number of surgical procedures performed by Panos,⁵ as well as the length of time each plaintiff had uninterrupted treatment.⁶ Additional monies were awarded for medical bills/liens and lost wage claims. Wrongful death cases were valued under a slightly different model not relevant to this dispute. Each point carried a dollar value which, when multiplied by the number of points, yielded a monetary award to each plaintiff. Each party submitted a proposed point evaluation and was given the opportunity to argue the claims before Justice Skelos. Each of the plaintiffs in the Panos Litigation was given the right to opt out of the Agreement and elect to proceed to trial. MLMIC reserved the right to withdraw from the Agreement if a large enough number of plaintiffs opted out, thereby negating the efficacy of the Agreement. Apparently recognizing that the amount of available insurance likely would be insufficient to compensate all plaintiffs fully and accepting that some measure of compensation was better than none, all plaintiffs ultimately accepted the Agreement. Thus, each plaintiff agreed to a pro rata share of all collectible insurance based on their awards. All parties benefitted from the Agreement. Plaintiffs benefitted because both liability (malpractice) and causation were conceded. This eliminated the uncertainties of trying each individual case and the possibility of a finding that Panos did not depart from good and accepted practice in a particular case, or that the claimed damages were not caused by his malpractice. Panos benefitted, though he objected to the Agreement, by avoiding exposure to personal liability for judgments which exceeded the available insurance coverage. MLMIC benefitted by avoiding the immense costs associated with the continued defense and trial of the large number of cases and the possibility of leaving Panos uninsured for a significant number of claims. MLMIC also avoided potential claims of unfair practices or bad faith caused by elevating one claim above other claims, paying an individual claimant before other claimants, or exhausting the available coverage inequitably. MLMIC further benefitted, as did HPIC, from the provision in the Agreement that interest on judgments against Panos would accrue only after this then anticipated declaratory judgment action was determined by the Court, rather than from the date of each entered judgment as provided for in CPLR §5003. In addition, plaintiffs agreed to reduce the amount of interest from the statutory 9 percent per year provided for in CPLR §5004 to 4 percent per year from the date of the Court’s determination, until paid. The Agreement also provided that the interest rate increases to 6 percent per annum if HPIC appeals the determination of this action. Interest is to be paid on “any unpaid Judgment”, subject to the terms of the insurance policies and irrespective of policy limits.⁷ Id. at