In 2003, a fire at a Hartford nursing home killed 16 elderly and disabled people. In the aftermath, 13 lawsuits were filed, but plaintiffs have still not received any money. In fact, they haven’t even gone to trial.

The reason for the delay? A dispute over exactly how much was available under the nursing home’s professional liability policy. The state Supreme Court just ruled this month, to the dismay of the plaintiffs, that just $1 million was available, and that amount would have to be split 13 ways.

Such a situation is unlikely to occur in the future. The Hartford fire — and the subsequent lawsuits — prompted legislation that was approved in the just-finished session of the General Assembly.

Now awaiting the signature of Gov. Dannel Malloy, the bill would require all nursing homes and home health care agencies, as of January 1, 2014, to have professional liability coverage that would provide up to $1 million for each person who is injured or killed because of professional negligence. However, there would be a $3 million cap for all claims within a coverage period.

The Connecticut Trial Lawyers Association backed the latest measure, as well as a similar bill proposed in 2012. "It was definitely an issue that was important to a lot of people and we got it passed with 15 minutes to spare" in the legislative session, said Rep. Gerald Fox III, co-chair of the Judiciary Committee. "I think most nursing homes do have professional liability insurance; that’s something we want to make clear. But there were some nursing homes out there without it, and if they went bankrupt or into financial distress, there would be no protection."

That’s what happened in the case that was before the Supreme Court. Because the company that owned the Greenwood Health Center nursing home filed for bankruptcy protection days after the fire, the only assets that the plaintiffs can file claims against are the limits of the professional liability policy. But questions over the policy terms have caused legal proceedings to drag out for more than a decade.

The Greenwood Health Center fire broke out on February 26, 2003, after psychiatric patient Leslie Andino set her bed on fire while flicking a cigarette lighter. Officials at the time said it was the 10th deadliest nursing home fire in U.S. history. Andino was charged with 16 counts of arson murder. She was later found incompetent to stand trial and remains committed to a psychiatric hospital.

Relatives of 13 of the 16 victims sued the nursing home’s operator for damages, saying it failed to adequately supervise Andino. The lawsuit also made negligence claims for insufficient response and a lack of safety training by the nursing home staff.

The case was assigned on the trial docket of Superior Court Judge Marshall Berger in Hartford, but it hasn’t gone very far since the issue of insurance coverage was raised. The nursing home was owned by the Lexington Healthcare Group, which was insured

by the Lexington Insurance Co., a subsidiary of AIG. (The two "Lexington" businesses are not related in any way.) The policy had two key numbers. As the insurance company saw it, at least, each of Lexington’s seven nursing homes had $1 million in coverage. But the total coverage for the company was $10 million.

In 2009, Judge Berger called the policy vague and said the 13 families should have access to the $10 million corporate policy limit. That would allow each plaintiff to recover up to $500,000, with the remainder available for attorney fees.

The insurance company’s lawyers, led by Jeffrey R. Babbin of Wiggin and Dana, appealed that decision directly to the Connecticut Supreme Court. Babbin argued that the aggregate limit of $10 million dollars applied to the nursing home’s seven properties together, and only provided $1 million of professional liability coverage per location.

Oral arguments were heard back in November. In June, the Supreme Court, by a 3-2 vote, agreed with Babbin’s argument. The result: The 13 claims can total only $1 million. "Under this ruling, if it stands, they would each receive about $77,000 a piece," said Sean McElligott, a complex litigation partner with Koskoff, Koskoff & Bieder in Bridgeport who argued on behalf of the families of the fire victims.

McElligott represents only one plaintiff. Several other lawyers are involved. One of them, Van Starkweather, whose office is in Manchester, called the $1 million figure inadequate for all of the plaintiffs. "I’m disappointed. It was a close decision," he said. "Three justices went with AIG. Two justices went with the victims."

As in all policy disputes, the question weighed by the justices came down to their interpretations of the meaning of a couple of words. In this case the words, on the so-called declarations page of the insurance policy, were "aggregate policy limit." In short, one part of the policy seemed to indicate that the $10 million "Aggregate Limit shall apply separately to each location owned or rented by" Lexington Health Care.

But, writing for the majority, Chief Justice Chase Rogers noted that an amendment to the policy specified that the aggregate applied to all of the properties, and not individual nursing homes. Rogers stated that when the policy and amendment were "read together," it was clear that each nursing home had access to only $1 million in coverage.

Dissenting in part, justices Dennis G. Eveleigh and Flemming L. Norcott said the plaintiffs should be able to recover up to $10 million. They agreed with the trial judge that there was ambiguous language in the policy. "When the words of an insurance contract are …susceptible of two [equally reasonable] interpretations, that which will sustain the claim and cover the loss must, in preference, be adopted," wrote Eveleigh.

McElligott explained how the dissenting opinion adds some fuel to his argument. He said that Eveleigh was referring to a widely accepted legal standard in contract law, called contra preferentem. In short, if a clause in a contract is shown to be too ambiguous, the courts are inclined to rule against the drafter of the policy who created the ambiguity.

McElligott said the intention of the law is to discourage insurance companies from writing policies with intentionally vague language. "How can you have the trial court and two dissenting justices find one interpretation that is reasonable, and have the majority find another definition?" he asked. "It doesn’t parse well. That’s why I’ll be moving for another hearing."

Justices Andrew McDonald and Carmen Espinosa did not take part in the decision, because they were not yet on the court when oral arguments were heard. McElligott said he will move for a new hearing that includes the two new justices.

Ryan Suerth, whose practice in Madison involves representing plaintiffs whose policy claims have been denied by insurance companies, said contra preferentem can be a compelling aspect of any argument in favor of enforcing a policy.

"It can really help someone challenge the insurance company if the policyholder feels the denial was unjustified," Suerth said. "Because if the policy is unclear, the insurance company should pay the claim."

At the same time, he said, the decision on whether a policy is clear or unclear rests squarely on the discretion of the court.

"In this case, whether you agree with the decision or not, they were one vote short," he said.•