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A Commonwealth Court judge has ruled that a Havertown gynecologist found negligent for sexually assaulting a patient was acting in the course of providing medical services, and so the state guaranty association and the MCARE Fund must cover more than $1.18 million in damages and interest awarded to the patient. In a memorandum opinion, Judge Doris A. Smith-Ribner last week rejected the argument of the MCARE Fund and the Pennsylvania Property and Casualty Insurance Guaranty that they did not have to cover the doctor, Allan Nachlis, because the Health Care Services Malpractice Act (CAT Fund Act) requires for coverage for professional services, and Nachlis’ sexual misconduct didn’t constitute professional services. “Dr. Nachlis performed part of the examination negligently and part of it criminally. He also may have performed part of it correctly,” Smith-Ribner wrote in Schreffler v. Pennsylvania Property and Casualty Insurance Guaranty Association. “How-ever . . . the encounter here was part of a normal medical treatment, and there were allegations of proof that the patient was harmed by negligent conduct of the doctor in the course of providing medical services associated with his specialized training as a gynecologist.” Denise Schreffler and her husband, Richard, brought suit against Nachlis, alleging he had inappropriately touched Denise’s genitals during an annual exam in 1993. The couple alleged malpractice, saying the doctor had also unnecessarily prescribed diagnostic tests and medications for an ovarian cyst that did not exist, according to the opinion. Nachlis had previously been convicted of aggravated indecent assault related to his treatment of Denise Schreffler, according to the opinion. In the civil case, Nachlis stipulated his negligence on the first day of trial in 1999, according to the opinion. A Delaware County Common Pleas judge then granted a directed verdict as to Nachlis’ negligence and that it was a substantial factor in causing harm to Schreffler, based on expert testimony from both the plaintiff and defense. A jury awarded $675,000 to Denise Schreffler and $75,000 to her husband. The Pennsylvania Superior Court affirmed the trial court’s ruling. The guaranty association became involved in the case when the Physicians Insurance Co. — with whom Nachlis’ had a professional liability policy — was liquidated. The guaranty association assumed Nachlis’ defense subject to reservation of rights letters, according to the opinion. The Medical Care and Reduction of Error Fund — the successor to the CAT Fund — became involved as the excess insurer. After the 1999 jury verdict, the guaranty association notified Nachlis that it would not cover the damages because his conduct constituted a criminal act, according to the opinion. The Schrefflers filed suit against the guaranty association, the MCARE Fund and Nachlis, seeking a declaration of coverage, according to the opinion. Smith-Ribner heard the case, and granted the Schrefflers’ motion for summary judgment March 9. The MCARE Fund argued in a motion for summary judgment that the lack of expert medical testimony at trial was an indication that the verdict wasn’t for anything but sexual assault, according to the opinion. But the Schrefflers contended that Nachlis’ stipulation of negligence at the beginning of the civil trial was an admission to the negligence accusations in the complaint, and that’s why there was no testimony at trial on the required standard of medical care, according to the opinion. Smith-Ribner concluded that trial judge’s directed verdict on the negligence count — when the Schrefflers had alleged medical negligence — meant that Nachlis “at least in part was providing a medical service.” “The reasonable inference that part of the verdict was attributable to the intentional sexual assault does not support the MCARE Fund’s assertions that no part of the award related to negligent conduct that was determined to have caused harm,” Smith-Ribner wrote. “The directed verdict may not be rendered a nullity, which would be the effect of adopting [the Fund's] position.” Lise Luborsky of Britt Hankins Schaible & Moughan represented the Pennsylvania Property and Casualty Insurance Guaranty Association. “We believe that Judge Smith-Ribner didn’t see the point we were making exactly, so we’re considering what to do next,” Luborsky said. “This is a very fact-sensitive matter, and it’s non-precedential.” The guaranty association and the MCARE Fund had also argued that the doctrine of collateral estoppel barred the issue of the determination of damages from being litigated again. Smith-Ribner said that the issue at hand was not the determination of damages but of insurance coverage, which had not yet been decided. Smith-Ribner also distinguished the facts in Schreffler from a 1999 Supreme Court decision called Physicians Insurance Co. v. Pistone. In that case, a patient accused a doctor of sexually assaulting her, but there was no allegation that the patient was harmed by anything the doctor had done during a medical exam. The court held that the sexual assault was not a medical skill associated with specialized training and was beyond the doctor’s scope of employment, according to the opinion. Schreffler is different, Smith-Ribner concluded, because the assault was carried out in the course of a routine gynecological exam. Anthony Reagoso, a solo practitioner in Media, and J. Patrick Holahan, a sole practitioner in Kennett Square, represented the Schrefflers. Reagoso said yesterday that he was pleased that his client would finally see some compensation “after all she’s gone through.” Smith-Ribner ordered the guaranty association to pay $200,000 — the limit of the policy Nachlis had with the Physicians Insurance Co. — and the MCARE Fund to pay $550,000, the balance of the jury verdict. The fund was also directed to pay pro-rated delay damages and statutory interest. Attorneys for the state Insurance Department, Zella Anderson Smith and Tawny K. Mummah, represented the MCARE Fund. A spokeswoman for the fund declined to comment yesterday. (Copies of the 16-page opinion in Schreffler v. Pennsylvania Property and Casualty Insurance Guaranty Association , PICS No. 04-0363, are available from The Legal Intelligencer . Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Some cases are not available until 1 p.m.)

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