Prior acts exclusion applies and coverage is excluded because claim was previously reported to another insurer.

This case involves contract interpretation and insurance coverage. Specifically, the health care plaintiff contended that the defendant insurance company acted in bad faith in failing to cover a medical malpractice claim against it.

The plaintiff purchased tail insurance from the defendant to protect it against professional and general liability that had occurred before this entity took over a specific hospital. The policy did not cover claims that had already been reported to another insurer, only against claims based on old, unknown incidents.

Subsequently, the plaintiff became involved in a lawsuit brought by a mother and her child based on alleged malpractice that occurred at the acquired hospital during the child’s birth in 2001. The defendant refused to defend the lawsuit and indemnify the plaintiff on the basis that the claim was not covered because the mother brought a similar lawsuit in 2002 on the child’s behalf that was litigated and dismissed. Therefore, the defendant contended that the first case was reported to another insurance company and the new case was excluded under the prior acts exclusion. The plaintiff argued that the old case was separate and distinct from the new case and the prior acts exclusion did not apply.

The U.S. District Court agreed with the defendant’s interpretation of the insurance contract. The court reviewed the contract and noted that the policy provisions required three conditions to trigger coverage: (1) the loss is for an injury caused by a medical incident; (2) the incident occurred before 2005; and (3) the claim was not reported to another insurer. In this case, the claim arose from the same loss event as the prior case, which was litigated before and was reported to another insurer. Therefore, the prior acts exclusion applied and coverage was properly excluded.

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