In its opinion filed on June 5, 2015, the Rhode Island Supreme Court (“the Court”) held that the Medical Malpractice Joint Underwriting Association of Rhode Island (“JUA”) had a duty to defend its insured (a nursing home, two of its general partners, and two of its employees – “the defendants”) against the allegations set forth in a separate civil action filed by the administrator of the estate of a former nursing home resident that alleged that the resident had been raped by one of the defendants’ employees.
The JUA had filed a declaratory judgment action to establish that it owed no duty to defend the defendants, alleging that the defendants were not entitled to commercial general liability coverage under the policy it had issued to the defendants because the sexual assault alleged in the estate’s complaint did not constitute an “occurrence,” which is defined in the policy as an “accident.”
The underlying civil action filed by the estate alleged that the defendants failed to properly supervise, train, or screen its employees, failed to provide proper security measures, failed to report that a resident had been abused or mistreated within twenty-four hours, and failed to discipline its employees following the alleged sexual assault. The JUA denied the defendants defense coverage, contending that the alleged sexual assault did not constitute a “medical incident” within the ambit of the provided insurance coverage and further contending that the alleged sexual assault cannot be construed as an accident under any definition and therefore is not an “occurrence” within the meaning of the insurance coverage.
Interpreting Insurance Contracts
The Court stated that an insurance policy is contractual in nature and, therefore, when interpreting the disputed terms of an insurance policy, the Court must do so in accordance with the rules of construction that govern contracts – the Court will not depart from the literal language of the policy absent a finding that the policy is ambiguous.
In order to determine whether the terms of an insurance policy are ambiguous, the Court gives words their plain, ordinary, and usual meaning, considering the policy in its entirety and not establishing ambiguity by viewing a word in isolation or by taking a phrase out of context. When an insurance policy term is found to be ambiguous, the policy will be strictly construed in favor of the insured and against the insurer.
Duty To Defend
In Rhode Island, the “pleadings test” is applied in order to ascertain whether an insurer has a duty to defend an insured: the trial court looks at the allegations contained in the complaint, and if the pleadings recite facts bringing the injury complained of within the coverage of the insurance policy, the insurer must defend irrespective of the insured’s ultimate liability to the plaintiff (i.e., when a complaint contains a statement of facts which bring the case within or potentially within the risk coverage of the policy, the insurer has an unequivocal duty to defend).
In the case it was deciding, the Court stated that the estate’s sexual assault complaint includes independent factual allegations offered in support of the claims of negligence on the part of the defendants, and the defendants are the insureds seeking coverage under the JUA policy (the alleged abuser is not an insured and there are no allegations of intentional or sexual activity on the part of the defendants set forth in the complaint).
The Court noted that the applicable insurance policy contained a “Definitions” section that defines “bodily injury” as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time,” and the policy defines “occurrence” to mean “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
The issue of whether the JUA owes the defendants a duty to defend them in the estate’s underlying lawsuit hinges on whether the facts alleged in the estate’s complaint constitute an “occurrence” to which the applicable coverage potentially applies. The Court stated that by defining an “occurrence” as an “accident,” the policy’s definition offers little guidance on deciding this issue because the word “accident” is not defined in the policy.
Black’s Law Dictionary defines “occurrence” as “[s]omething that happens or takes place; specif[ically], an accident, event, or continuing condition that results in personal injury or property damage that is neither expected nor intended from the standpoint of the insured party. This specific sense is the standard definition of the term under most liability policies.”
Black’s Law Dictionary defines the legal term “accident” as “[a]n unintended and unforeseen injurious occurrence; something that does not occur in the usual course of events or that could not be reasonably anticipated; any unwanted or harmful event occurring suddenly, as a collision, spill, fall, or the like, irrespective of cause or blame … ”
The Court stated that the plain and ordinary meaning of the term “accident” as “an unintended and unforeseen injurious occurrence” invites the threshold question: from whose perspective is the unforeseen occurrence to be assessed (from the defendants’ viewpoint, the alleged sexual abuse events appear to be both unexpected and unforeseen – it was not the usual course of events when an employee, whom the defendants hired, supervised, and trained, was later alleged to have sexually molested one of its residents). The Court held that it does not consider the subjective intent of the parties, but rather “the intent expressed by the language of the contract.”
The Court agreed with the trial court’s determination that there are factual allegations that are made in the complaint by the plaintiffs that the defendants acted in a particular way or failed to act in a particular way that added to the injuries caused by the employee who committed the sexual act (the Court distinguished a prior appellate case that determined that there was no duty to defend sexual molestation allegations because in the prior case, the Court examined the language of a policy exclusion specifically related to sexual molestation – in this case, the Court was confronted with the core policy coverage terms “accident” and “occurrence” and therefore had no need to evaluate the estate’s claims of negligent hiring and supervision in the context of a policy exclusion for sexual molestation (the JUA had made it clear that, although the policy includes sexual and criminal act exclusions, it was not arguing on appeal that either of these exclusions in the policy applies)).
The Court stated that if it adopted the JUA’s narrow reading of “accident” (i.e., that the factual allegations of negligence in the estate’s complaint do not constitute an “accident”), then that reading would obviate the need for some exclusions included in the policy: the intended-injury and sexual act exclusions would serve no purpose if all intended injuries and injuries arising out of sexual acts were excluded in the first instance by the terms of the policy itself (the JUA’s interpretation of the policy language would render both exclusions mere surplusage).
The Court held that the JUA has a duty to defend the defendants against the allegations of negligence set forth in the complaint: any doubts as to the adequacy of the pleadings to encompass an occurrence within the coverage of the policy are resolved against the insurer and in favor of its insured. The Court held that the “pleadings test” establishes an unequivocal duty to defend on the part of the JUA when the complaint in the underlying action contains factual allegations that bring the case within or potentially within the risk coverage of the policy.
Source Medical Malpractice Joint Underwriting Association of Rhode Island v. Charlesgate Nursing Center, L.P., et al., No. 2013-359.
If you or a family member were injured (or worse) in a nursing home in Rhode Island or in another U.S. state, you should promptly find a Rhode Island nursing home claim lawyer, or a nursing home claim lawyer in your state, who may investigate your nursing home claim for you and represent you in a nursing home case, if appropriate.
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