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Click here for the full text of this decision FACTS:In December 1996, Howard Flax sought treatment at Sibley Memorial Hospital in Washington, D.C. He was treated by the emergency room physician on duty, Dr. Richard Doyan, who gave him a chest x-ray. Doyan found no evidence of pneumonia, but possibly a large lymph node. He diagnosed Flax with acute bronchitis. The next day, a radiologist, Dr. Newman, read Flax’s x-ray and also found his lungs “probably normal.” He sent his report to the emergency room physician on duty that day, Dr. Cooper Pearce. Though it was Pearce’s duty to inform Flax or Flax’s regular physician of the report, he allegedly did not do so. Flax was later diagnosed as having a form of lymphoma, from which he ultimately died. Alleging that the lymphoma was present and should have been caught during Flax’s Dec. 1996 emergency room visit, Flax’s representative, Jill Flax, filed suit in a D.C. court against Sibley, Doyan, Newman and Pearce. Jill Flax also named as defendants CP National (CPN), who employed Doyan and Pearce, and National Emergency Services (NES), the parent company of CPN. NES and CPN had professional liability insurance policies for its employees from Columbia Casualty Company. Pursuant to the policy, Columbia defended NES, CPN, Doyan and Pearce. A dispute arose, however, over the applicable policy limits. Columbia claimed that the policy expressly provided for a single “per loss event” limit of $1 million. NES and CPN argued that the policy afforded separate $1 million limit each for claims against Doyan and Pearce, for a total of $2 million. NES and CPN filed a petition in Harris County, alleging breach of contract and breach of the duty of good faith and fair dealing against Columbia. The companies sought a declaration regarding the policy’s limits. The trial court granted the companies’ motion for partial summary judgment on the policy limits, then, after disposing of other claims, entered final judgment for NES and CPN. This court issued an opinion in the case on May 27, 2004, but issues this opinion on motion for en banc reconsideration in its stead “to clarify” the earlier opinion. HOLDING:Reversed and rendered; motion for en banc reconsideration denied. The court dissects the provisions of “Section III” and “Endorsement 12.” Section III states that the limit of liability for “each claim” is “the limit of our liability for all injury or damage arising out of, or in connection with, the same or related medical incident.” Claim is defined as “the receipt by you of a demand for money or services, naming you and alleging a medical incident,” and “medical incident” is defined as “any act, error, or omission in the providing of or failure to provide professional services by you.” Endorsement 12 says there is a $1 million “Per Loss Event” and that this per-loss event limit applies “to all Insurers for all Damages to all persons for injuries to one patient.” The court finds that defining what is meant by “per loss event,” which is not defined in the policy, is a matter of first impression for Texas. Generally, a loss event is the event that gives rise to the insurer’s liability under the contract. Columbia, however, provided CPN and NES professional liability insurance written on a claims-made basis. Under claims-made policies, versus occurrence policies, “the mere fact that an insured loss-causing event occurs during the policy period is not sufficient to trigger insurance coverage of the loss.” The insured is to give notice of any claims, for instance. The court notes that Columbia interprets Endorsement 12 literally, whereas NES and CPN interpret Endorsement 12 as limiting Columbia’s $1 million liability per loss event only with respect to all persons asserting claims for injuries to one patient, i.e., derivative claims. While the court agrees that Endorsement 12 limits derivative claims, the court finds it limits even more than just derivative claims. “Breaking down the sentence into its logical parts, the per loss event limit applies to all insureds (NES, CPN, Dr. Doyan, and Dr. Pearce) for all Damages (any damages sought in the Flax suit) to all persons (Mrs. Flax and the Flax estate) for injuries to one patient (Flax).” The court finds that though a literal interpretation of Endorsement 12 seems to focus heavily on the one patient aspect, the endorsement is limited by Section III and its limit of liability for injury arising out of, or in connection with “the same or related medical incident.” Therefore, the court continues, “if one doctor committed an act of malpractice against a patient, and, six months later, the patient returned to the same hospital where a second doctor committed a second, completely independent act of malpractice on the same patient, there would not be one ‘loss event’ despite there being only one patient; because the two doctors did not cause an injury arising out of, or in connection with, the ‘same or related medical incident,’ (the second doctor’s act was completely independent) the insurance company’s limit of liability would not be limited, and there would be two per loss event limits.” The court concludes that the plain language of the policy limits total recover for all injury or damages arising out of, or in connection with, the same or related medical incident to $1 million, regardless of the number of insureds sued. The court then examines whether the medical incidents forming the basis of Jill Flax’s lawsuit are related medical incidents. The court rules they are related: all the medical incidents involved the same patient, the same facility, during the same period of time, with regard to the same x-ray, and with the same alleged improper diagnosis, all leading to the Flax’s early death from lymphoma. OPINION:Keyes, J.; Nuchia, Jennings and Keyes, JJ.

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