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Records v. Aetna Life & Cas. Ins.

October 25, 1996


On appeal from Superior Court of New Jersey, Law Division, Cape May County.

Approved for Publication October 25, 1996.

Before Judges Long, Skillman and Cuff. The opinion of the court was delivered by Skillman, J.A.D.

The opinion of the court was delivered by: Skillman

The opinion of the court was delivered by SKILLMAN, J.A.D.

This appeal requires us to determine the scope of the coverage provided under a malpractice policy which insures a physician for liability from "injury arising out of the rendering of professional services."

Plaintiff is a doctor who served as the primary care physician to approximately 100 residents of the Crest Haven Nursing Home in Cape May Courthouse. On April 12, 1991, at a time when plaintiff was absent from the nursing home, Dolores P. Koch, a registered nurse, noticed that one of plaintiff's patients seemed to be in acute distress. After first unsuccessfully attempting to telephone plaintiff and his substitute physician, Koch consulted with one of her supervisors, who told her to transfer the patient to a hospital. While Koch was waiting for the ambulance to transport the patient, plaintiff arrived at the nursing home. Upon learning that the nursing staff had decided to transfer his patient to a hospital without consulting him, plaintiff became very angry. He went to Koch's work station, grabbed her arm and steered her into the nurses' lounge. According to Koch, plaintiff pointed a finger in her face, while continuing to hold her arm and walk forward, and began screaming at her. Plaintiff told Koch that the patient was chronically ill, that nothing could be done for him in the hospital and that she would be held personally responsible for his hospital bill. As this encounter escalated, Koch continued to retreat, eventually backing into the edge of a table and bending over backwards. According to Koch, this movement caused a serious injury to her back, including a herniated disc. Koch also alleges that plaintiff slapped her on the shoulder which caused a further injury.

Koch subsequently filed a personal injury action against plaintiff, alleging both negligence and assault and battery and seeking compensatory and punitive damages. Plaintiff demanded that defendant Medical Inter-Insurance Exchange (MIIX), with which he had a medical malpractice policy, and defendant Aetna Life and Casualty Insurance Company (Aetna), with which he had a homeowners policy, provide a defense and indemnify him for any judgment that might be entered. Both insurers denied coverage, prompting this declaratory judgment action.

The case was brought before the trial court by cross-motions for summary judgment. The court concluded in a written opinion that Aetna was entitled to summary judgment because the incident fell within the "business pursuits" exclusion of its homeowners policy. However, the court granted plaintiff summary judgment against MIIX, concluding that the incident and Koch's alleged injuries "arose out of the rendering of professional services." The court entered an order requiring MIIX to defend the action and to indemnify plaintiff for any judgment for negligence that might be entered. The order further provided that MIIX had no obligation to indemnify plaintiff for punitive damages and that MIIX would be required to indemnify plaintiff for a judgment for assault and battery "only if a jury determines that [plaintiff's] alleged intentional acts resulted in improbable and unintentional consequences to Nurse Koch." *fn1

MIIX appeals from the order requiring it to defend and indemnify plaintiff and plaintiff appeals from the summary judgment in favor of Aetna. We affirm.

The medical malpractice policy MIIX issued to plaintiff provides coverage for "injury arising out of the rendering of or failure to render ... professional services" and defines "professional services" to mean "services requiring specialized knowledge and mental skill in the practice of the profession." There is no reported New Jersey decision construing this policy language. *fn2 Therefore, we must consider prior decisions in this State construing similar language in other kinds of insurance policies as well as decisions in other jurisdictions construing this standard provision of a medical malpractice policy.

Preliminarily, we note that "when members of the public purchase policies of insurance they are entitled to the broad measure of protection necessary to fulfill their reasonable expectations." Sparks v. St. Paul Ins. Co., 100 N.J. 325, 337, 495 A.2d 406 (1985) (quoting Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482, 170 A.2d 22 (1961)). Consequently, any ambiguity in an insurance policy must be resolved in the insured's favor. Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175, 607 A.2d 1255 (1992).

The practice of medicine includes the diagnosis of a patient's condition and the determination of whether that condition requires hospitalization. Thus, if plaintiff himself had decided to transfer his patient to a hospital and the patient or the patient's family had filed a claim based upon that decision, plaintiff clearly would have been entitled to coverage under the MIIX policy for malpractice in "the rendering of professional services."

However, the MIIX policy provides coverage not only for claims of malpractice in the direct "rendering of professional services" but also for any other claim "arising out of" the rendering of professional services. The phrase "arising out of" has been defined broadly in other insurance coverage decisions to mean conduct "originating from," "growing out of" or having a "substantial nexus" with the activity for which coverage is provided. Westchester Fire Ins. Co. v. Continental Ins. Co., 126 N.J. Super. 29, 312 A.2d 664 (App. Div. 1973), aff'd o.b., 65 N.J. 152 (1974); Franklin Mut. Ins. Co. v. Security Indem. Ins. Co., 275 N.J. Super. 335, 340-41, 646 A.2d 443 (App. Div.), certif. denied, 139 N.J. 185 (1994); see also Harrah's Atlantic City, Inc. v. Harleysville Ins. Co., 288 N.J. Super. 152, 157-59, 671 A.2d 1122 (App. Div. 1996); Minkov v. Reliance Ins. Co., 54 N.J. Super. 509, 516, 149 A.2d 260 (App. Div. 1959). Consequently, if plaintiff had consulted with Koch in deciding whether to transfer a patient to the hospital and negligently stepped on her toe during the course of that consultation, any resulting injury could reasonably be said to "originate from," "grow out of" or have a "substantial nexus" with plaintiff's rendering of professional services and thus fall within the coverage of the MIIX policy.

Although plaintiff's Discussion with Koch may have had a less direct relationship to his professional services than this hypothetical, we are nevertheless satisfied that it "arose out of" the rendering of those services. When plaintiff accosted Koch, the patient was still in the nursing home waiting for the arrival of the ambulance. Consequently, plaintiff's actions could be viewed as an effort to prevent the patient's transfer to the hospital until after plaintiff had had an opportunity to determine his condition and to speak with members of his family. *fn3 In addition, since plaintiff had a substantial number of other patients in the Crest Haven Nursing Home, he had a direct interest in the nursing home's general practices and procedures relating to the transfer of patients. Therefore, plaintiff's Discussion with Koch regarding ...

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