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Mora v. Lancet Indemnity Risk Retention Group, Inc.

United States District Court, D. Maryland

October 16, 2017

CLAUDIA M. MORA et al., Plaintiffs,



         This case arises out of the unfortunate death of Juan G. Castillo, who suffered a fatal heart attack after Dr. Ishtiaq A. Malik treated Mr. Castillo at Dr. Malik's urgent care clinic in Silver Spring, Maryland. Mr. Castillo's wife and three children brought this declaratory judgment action against Dr. Malik's insurer, Lancet Indemnity Risk Retention Group, Inc. (“Lancet”), after Lancet disclaimed coverage in Plaintiffs' underlying medical malpractice action, citing Dr. Malik's failure to cooperate as sufficient basis to deny coverage.[1]

         This Court's prior opinion and order on the parties' cross motions for summary judgment left one narrow issue for trial: whether Lancet could demonstrate that Dr. Malik's failure to cooperate prejudiced Lancet's ability to defend the underlying medical malpractice claim against Dr. Malik's entities. The Court held a two-day bench trial on July 18 and 20, 2017. The Court has heard the evidence, reviewed the exhibits, considered the materials submitted by the parties, and had the benefit of the arguments of counsel. It now issues this Decision as its findings of fact and conclusions of law in compliance with Rule 52(a) of the Federal Rules of Civil Procedure.[2] It finds the facts as stated in this opinion based upon evaluating the evidence, drawing all reasonable inferences, and assessing witness credibility. For the reasons set forth below, the Court finds that Plaintiffs/Counterclaim Defendants are entitled to a judgment declaring that Advanced Walk-In Urgent Care, LLC and Union Multi-Care Medical Center, Inc. are insured by Lancet under Policy Number L1201402002735 for the claims asserted against them in the underlying medical malpractice case brought before the Circuit Court of Montgomery County, Maryland, Mora v. Advanced Walk-In Urgent Care, LLC, Case No. 407276-V. The Court also finds that Lancet is thus liable for the money damages of its Insureds pursuant to the Policy's terms.


         On March 2, 2016, Plaintiffs Claudia Mora, her two minor children, and her son, Juan Carlos Castillo (“Plaintiffs”), filed this declaratory judgment action in the Circuit Court for Montgomery County against Lancet Indemnity Risk Retention Group, Inc. (“Lancet”), Advanced Walk-In Urgent Care, LLC, Union Multi-Care Medical Center, Inc., and Dr. Richard Akoto in both his individual capacity and as a professional corporation (collectively, “Dr. Akoto”). See ECF No. 2. Plaintiffs ask the Court to declare that Defendant Lancet is required under its group professional liability insurance policy with Advanced Walk-In and Union Multi-Care to satisfy the judgment rendered against its Insureds and in favor of Plaintiffs in a medical malpractice case decided in the Circuit Court for Montgomery County.

         Lancet removed the case to this Court on April 1, 2016 based on diversity of citizenship pursuant to 28 U.S.C. § 1332 and filed a counterclaim. ECF Nos. 1 & 22.[3] Through its counterclaim, Lancet asks this Court to declare its insurance agreement with the Defendants void because one of the policy's insureds, Dr. Ishtiaq Malik, failed to comply with the Policy's notice and cooperation provisions. ECF No. 22 at 15-16. Plaintiffs moved for summary judgment and Lancet filed a cross-motion for summary judgment. See ECF Nos. 74 & 76.

         On March 1, 2017, the Court issued a Memorandum Opinion and Order denying both motions. See ECF Nos. 85 & 86. It concluded that Lancet could not disclaim coverage based on the insurance Policy's notice provision as a matter of law. However, factual disputes prevented the Court from deciding whether Lancet could disclaim coverage based on the insurance policy's cooperation provision.

         On April 1, 2016, Plaintiffs moved to file a second amended complaint to clarify that the requested relief includes a monetary judgment up to the Policy limit of $1, 000, 000, plus post-judgment interest of $118, 722.50. See ECF No. 93-3 at 9. The Court denied Plaintiffs' motion as moot on July 10, 2017, after the parties agreed at a telephonic hearing that Plaintiffs' failure to request monetary relief in the first amended complaint did not preclude Plaintiffs from recovering damages in the event that Plaintiffs prevail on the merits. See ECF No. 107. The parties therefore agreed to table the discussion of damages until the Court rendered a judgment on liability. Therefore, this Memorandum Opinion will only assess Lancet's liability under the Policy.


         A. The Policy

         Defendant Lancet Indemnity Risk Retention Group, Inc. (“Lancet”) is a risk retention group chartered in Nevada and organized pursuant to the Liability Risk Retention Act (“LRRA”), 15 U.S.C. §§ 3901 et seq. Risk retention groups are different than other insurance companies because they must be owned by their insureds and their members are relatively homogeneous. For example, Lancet only insures medical professionals and is owned and funded by the physicians in the group. See Trial Tr., 27, July 18, 2017 (Teter Testimony).

         In 2014, Lancet issued a claims-made-and-reported policy[4] (“Policy”) to Union Multi-Care Medical Center, Inc. (“Union Multi-Care”) and Advanced Walk-In Urgent Care, LLC (“Advanced Walk-In”), both located in the same office in Silver Spring, Maryland. See Policy, Def.'s Ex. 1. Dr. Ishtiaq A. Malik (“Dr. Malik”) owned and operated both practices. He and his colleague, Dr. Lendicta Q. Madden (“Dr. Madden”), were named as additional Insureds in the Policy.[5] See Def.'s Ex. 1 at 12. The Policy commenced on July 1, 2014 and expired on July 1, 2015. Id. at 2.

         The Policy contains a “Cooperation and Assistance” clause which states, in pertinent part:

The Insured must cooperate and assist the Company and the appointed defense counsel in all aspects of the investigation and defense; and shall, upon request, submit to examination and interrogation by a representative of the Company, under oath if required, attend hearings, depositions and trials, assist in effecting any settlement, securing and giving evidence, and obtaining the attendance of witnesses, all without charge to the Company.
The Insured shall further cooperate with the Company to do whatever is necessary to secure and affect any rights of indemnity, contribution or apportionment that the Insured may have. Any failure of the Insured to cooperate that prejudices our ability to defend any Claim, shall void this Policy, nullify coverage and will disqualify the Insured from being eligible to exercise the option to purchase a Extended Period endorsement.

Def.'s Ex. 1 at 34 (emphasis in original).

         The Policy also includes an advance consent provision. This provision operates independently of the notice and cooperation provision, and states in pertinent part, that Lancet “ha[s] the right and duty to defend any Claim covered by the Policy.” Def.'s Ex. 1 at 15 (emphasis in original).

         B. The Underlying Medical Malpractice Action

         On January 15, 2015, Juan G. Castillo visited Dr. Malik at Advanced Walk-In seeking treatment for chest pains. See Trial Tr., 182-83, July 20, 2017 (Castillo Testimony). Dr. Malik had not previously treated Mr. Castillo. Mr. Castillo was not conversant in English, and Dr. Malik did not speak any Spanish, Mr. Castillo's native tongue. Under these circumstances, Dr. Malik's practice was to ask one of Advanced Walk-In's bilingual staff members to be present at the appointment and translate for him. See Trial Tr., 77, July 20, 2017 (Madden Testimony). However, no direct evidence established whether a bilingual staff member translated for Dr. Malik during the January 15 appointment with Castillo.

         During the same appointment, Dr. Malik prepared a short consultation note explaining his physical assessment of Mr. Castillo, the diagnostic tests administered, and Dr. Malik's proposed follow-up care for Mr. Castillo. See Def.'s Ex. 2. The consultation note explains that Castillo complained of atypical chest pain and shortness of breath a few times a day. Dr. Malik conducted both a treadmill stress test and an electrocardiogram (“EKG”). The treadmill stress test had to be stopped after only three minutes because, according to the consultation note, Mr. Castillo was experiencing chest pain. Id. Dr. Malik then prescribed Mr. Castillo Metoprolol, a common beta blocker used to treat chest pain, and rendered no further treatment. Trial Tr., 212, July 18, 2017 (Schwartz Testimony). Eight days later, Mr. Castillo died from a sudden cardiac event while at work.

         After Mr. Castillo's death, his widow, Claudia Mora, and her children (“Plaintiffs”) prepared to file a medical malpractice claim against the Union Multi-Care, Dr. Malik, P.C., and possibly Advanced Walk-In, as well as Castillo's regular treating cardiologist, Dr. Akoto. On July 2, 2015, Plaintiffs' counsel notified Lancet in writing of the impending suit. See Def.'s Ex. 7. Plaintiffs' counsel also ...

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