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Patel v. Associates in Obstetrics and Gynecology


June 14, 2010


On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-3352-07.

Per curiam.


Argued telephonically February 18, 2010

Before Judges Cuff, Payne and Miniman.

Plaintiff, Falguni Patel, M.D., appeals from that portion of an order of summary judgment, dated March 14, 2009, dismissing her claims of entitlement to "tail" medical malpractice insurance or to a fund to be established for the purpose of procuring such coverage. We affirm.

The record indicates that on March 22, 2002, Dr. Patel signed a written agreement for employment as a physician by a professional corporation known as Associates in Obstetrics and Gynecology, P.A. (AOG). Pursuant to paragraph 8 of the agreement, Dr. Patel's initial term of employment was to commence on July 1, 2002 and continue for three years to June 30, 2005. Pursuant to paragraphs 7 and 12, at the end of that initial term, Dr. Patel would be given the option of signing a continuation of employment agreement, at which time she would be obligated to purchase capital stock and sign a shareholder agreement.

Paragraph 3 of the agreement provided that Dr. Patel would be included in the various employee benefit programs provided to all employees, and that the employer would "provide and pay the premium for malpractice insurance coverage covering Employee." Paragraph 4 contained an indemnification agreement by which Dr. Patel agreed to indemnify AOG for damages and costs arising from Dr. Patel's negligence to the extent that those damages and costs were not covered by insurance. Additionally, that paragraph provided:

Employee will have the same malpractice coverage as the other physician employees of the Employer. Currently, such coverage includes an extended reporting rider.

Additionally, paragraph 16 of the agreement contained an integration clause that provided: "No amendment or variation of the terms of this Agreement shall be valid unless made in writing and signed by Employee and a duly authorized representative of Employer."

Dr. Patel testified in her deposition that she remained employed through June 30, 2005, at which point her employment agreement expired. Although she was offered an opportunity to purchase a share of the practice, the parties could not agree on terms. As a consequence, Dr. Patel remained a salaried employee until her resignation on December 27, 2006.

At the time Dr. Patel joined the practice, AOG and its six physicians were covered by occurrence-based medical malpractice coverage written by Zurich Insurance Company. However, in February 2004, Zurich notified AOG that it was withdrawing from the New Jersey market. Thereafter, AOG obtained claims-made coverage from MIIX Advantage Insurance Company of New Jersey in the period from March 1, 2004 to March 1, 2005 and claims-made coverage from MDAdvantage Insurance Company of New Jersey thereafter. Occurrence-based coverage affords coverage for occurrences taking place in the policy period, regardless of when reported. Claims-made coverage, as the name suggests, only affords coverage for those claims that are made in the coverage period. To obtain extended coverage for occurrences taking place in a coverage period but not reported until later, one must obtain "tail" coverage providing insurance during an extended reporting period.

The MIIX policy in effect in 2004 and 2005 contained several provisions governing tail coverage. It stated:

L. Extended Reporting Period

1. If this policy is cancelled or non-renewed for any reason, the named insured (or any insured identified on the Declarations or on a Schedule of Insureds, if that insured's insurance is cancelled or non-renewed) will have the right to obtain an unlimited extended reporting period by giving written notice to the Company within 30 days of termination, and by paying to the Company the required premium when due.

M. Death, Disability, or Retirement Extended Reporting Period

The Company will provide an extended reporting period without payment of additional premium to any insured named on the Schedule of Insured Providers whose insurance is cancelled or non-renewed because the insured

1. fully retires from the practice of medicine and surgery during the policy period, is at least sixty (60) years of age and had been insured by the Company under a claims-made policy for at least three consecutive years.

None of the doctors had reached the age of 60 in the 2004-05 policy period, the MIIX coverage had not been in force for three years at the expiration of the policy period, and none retired during this period.

Thereafter, AOG and its physicians were covered by medical malpractice insurance issued by MDAdvantage. Our examination of the MDAdvantage policy appearing in the record on appeal discloses that it contained the language found in the MIIX policy in paragraph L offering an extended reporting period upon payment of the required premium. The MDAdvantage policy did not contain the language found in paragraph M offering a free extended reporting period following death, disability or retirement.

Dr. Patel terminated her employment with AOG while MDAdvantage's coverage was in effect, not that of MIIX. She was required to obtain her own tail coverage, and she did so at a cost of $146,000.

Thereafter, the doctor filed a four-count complaint against AOG and its principals, Jeffrey Soffer, M.D. and Elynne B. Margulis, M.D., alleging breach of contract, promissory estoppel, unjust enrichment, and material misrepresentation. Following entry of partial summary judgment against her, the parties entered into a stipulation dismissing all claims with prejudice excluding the doctor's alleged entitlement to tail coverage or establishment of a fund for the purpose of procuring such coverage, as to which the doctor preserved her right of appeal.

On appeal, Dr. Patel presents the following arguments:

I. The Trial Court Erred in Granting Summary Judgment Since a Genuine Issue of Material Fact Exists Because the Employment Agreement Called For All Doctors to Have the Same "Coverage" and Not Just the Same "Policy"; and the New Policy Itself Breached the "Same Coverage" Requirement of the Contract Because the Policy Did Not Provide the Same Coverage to Each of the Three Physicians Because of the Ages of Dr. Soffer and Dr. Margulis Resulted in the Extended Benefits Feature of the Policy Treating Each Physician Materially Differently.

II. The Trial Court Erred Because There is a Genuine Issue of Material Fact, Namely, What the Parties' Understanding of What the "Coverage" Going Forward Would Be, Since the New Policy Itself Did Not Provide the Same Coverage To Each Physician.

1. Reliance on Margulis' Discussion Does Not Seek to Alter the Terms of the Employment Agreement, But Only to Clarify What the Parties Had Agreed Would Be the Coverage Package as to All Three Doctors Going Forward in the Practice.

2. Because The New Policy Treated Dr. Margulis Materially Differently as Well, the Discussion of What the Coverage Package Would Be Going Forward Was Almost as Important to Margulis as Dr. Patel and Therefore Credible and Not Barred by Parole Evidence Doctrine.

In essence, Dr. Patel construes her employment agreement with AOG as a contract to provide the same "coverage" as that available to the other doctors in the practice, not the same "policy." She then argues that her coverage was different from that available to Doctors Soffer and Margulis. Relying on the language of the MIIX policy, Dr. Patel contends that Dr. Soffer, who was fifty-seven years of age at the time that Dr. Patel left the practice, was essentially provided with free tail coverage as the result of that policy's provision offering a free extended reporting period to covered physicians who reach the age of sixty, have fully retired from the practice of medicine and surgery, and have been insured by MIIX under a claims-made policy for at least three years. Similarly, because she was fifty-two at the time, Dr. Margulis had "a very good chance" for such free tail coverage. On the other hand, the possibility of free coverage for Dr. Patel was "infinitesimal" because of her relative youth.

The difficulty with Dr. Patel's argument lies in the fact that the MIIX coverage had expired by the time that the doctor left the practice, and the succeeding MDAdvantage policy conditioned the availability of tail coverage on the insured's payment of the necessary premium. Moreover, no doctor ever met the conditions for the free tail coverage offered by MIIX because the coverage did not remain in effect for three years, no doctor had retired by the time that summary judgment was granted, and none had reached the age of sixty. As a final matter, we note that if claims-made coverage is issued to a medical practice, tail coverage is only necessary if a member of that practice leaves, either voluntarily, as did Dr. Patel, or through death, disability or retirement. Because Dr. Patel left, she had to undertake the additional, and considerable, expense of obtaining tail coverage on her own. However, contrary to the doctor's arguments, she was not treated differently from any other member of the practice, all of whom were covered by claims-made insurance. What distinguished Patel was that she left, not that her coverage differed from that offered to others, as she maintains. As a consequence, entry of summary judgment against her was warranted. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998).

We regard any other arguments raised by Dr. Patel in her brief to be of insufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).



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