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(Article from Insurance Law Alert, September 2016)

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A Pennsylvania federal district court ruled that a malpractice lawsuit alleging several causes of action is a single “claim” under a professional liability policy, subject to a single per-claim limit.  Westport Ins. Corp. v. Mylonas, 2016 WL 4493192 (E.D. Pa. Aug. 26, 2016).

The coverage dispute arose out of malpractice claims filed against an attorney.  A jury found in the plaintiff’s favor and awarded $525,000 in damages.  The insurer brought a declaratory judgment action, seeking a ruling that its liability was limited to $500,000 (the per-claim limit under the policy).  Defense costs eroded policy limits, and only limited monies were available to pay the judgment because defense costs had significantly eroded the per claim limit.  To maximize his recovery, the underlying plaintiff argued that the malpractice suit arose from multiple claims because he had asserted multiple causes of action, requiring the insurer to provide up to $1 million in coverage (the aggregate limit). 

The court ruled that the malpractice suit is a single “claim” under the policy, defined as “a demand made upon any INSURED for LOSS . . . including but not limited to, service of suit . . .”  The court rejected the argument that the lawsuit constituted multiple claims because it alleged “several unrelated breaches of the standard of care, which caused separate and distinct injuries.”  The court further rejected the contention that the issue was one of fact for the jury based on expert testimony.  The court reasoned that “the number of counts” in a complaint is not dispositive and that “regardless of how [the claimant] frames the contentions made in the underlying lawsuit for the purpose of interpreting the professional liability policy . . . the demand in the form of service of the suit constitutes only one claim under the Policy. . . .”