Texas Small firm wins $3.4 million against doctor's insurer

By Sylvia Hsieh

The Daily Record Newswire

BOSTON, MA -- After winning a $22 million medical malpractice verdict on behalf of a young man who went into the hospital complaining of neck pain and left paralyzed from the waist down, lawyers for the man won a $3.4 million verdict last month in a companion case against a doctor's insurance company for not covering the malpractice award.

The insurance company, Medicus Insurance, would have had to pay around $750,000 for the doctor's share of liability in the underlying med-mal case, but now is on the hook for $3.4 million for misrepresenting the terms of its policy in violation of the Texas deceptive trade practices act.

The twin cases put winning attorney Stephen A. Barnes in the odd position of arguing in favor of the same doctor he alleged had committed malpractice in the earlier trial, since the heart of the case revolved around whether the doctor's negligence was so obvious that he should have reported it to the insurer.

"We needed some evidence to counter the argument that the doctor was so glaringly negligent. ... In the underlying trial we didn't argue it was such a heinous thing he did to the patient. We argued he was five percent liable. That doesn't mean you should be denied coverage," said Barnes, a partner with the five-lawyer firm McGehee, Chang & Barnes in Houston.

The attorney for Medicus, Michael W. Huddleston, did not return a call seeking comment for this article.

Two phone calls

In the underlying med-mal case, Barnes alleged that three doctors and a hospital were negligent in treating his client, Thomas Colombrito, by ordering a spinal tap after putting him on anti-coagulants for neck pain.

"Even without anticoagulants a spinal tap can cause blood clots. The warning label on Heparin [the anticoagulant] says 'Do not do a spinal tap,'" said Barnes, who is also a medical doctor.

One of the defendants, Dr. Richard Torres, was the on-call physician covering 45 patients.

During the trial, Torres testified that he conducted two phone calls about Colombrito, one with a nurse who said the patient had trouble peeing, and one with a neurologist who told him he would take care of everything. Torres admitted on the stand that in retrospect he should never have assumed anything.

The jury found him liable for approximately $750,000.

In denying coverage, his insurer, Medicus, argued that clauses in the policy required that Torres tell the insurer if he knew or should have known he would be sued.

Torres assigned his claim against the insurer to Colombrito.

In the trial against the insurer, Barnes argued that aside from the two phone calls Torres knew nothing more about the case until he received a letter telling him he was being sued.

"Our contention was there was nothing to report. The testimony of Dr. Torres was he didn't know anything about the outcome of my client, so how could he anticipate a lawsuit?" said Barnes, who also presented evidence that the insurance company's lawyers at the time anticipated "zero liability" against Torres.

According to Barnes, the defense also argued that Torres should have been covered by his previous insurer.

But Barnes argued neither the old policy nor the Medicus policy was an occurrence policy that limited coverage to incidents that occurred during the coverage period.

"This was a claims-made policy. That means if a claim is made against you [during the coverage period], we've got you covered," he said.

Before trial, the judge had already found liability on summary judgment against the insurance company for breach of contract.

In a trial that spanned 24 hours from opening to closing arguments, Barnes made quick work of the evidence.

"To get from breach of contract to deceptive [practices] is not much of a reach," he said.

'Good hands, not shady hands'

In his closing, Barnes exploited a string of familiar catch phrases used by insurance companies.

"'Like a good neighbor'. 'You're in good hands'. They basically imply an insurance company is there to protect and shield you. ... You're supposed to be in good hands, not shady hands," he said, pointing out that Torres' practice group paid extra to purchase a "nose" policy that covered him not only for claims one year in the future but also up to seven years in the past.

Barnes portrayed an insurance company that was happy to take money when selling a policy, but when it came time to pay out a claim brought out the microscope to look at the fine print.

Getting caught in a policy language trap may have been an experience familiar to some of the jurors.

"I can't tell you how many people raised their hands during jury selection to say, 'I've been screwed over in the past with an insurance company [relying on] a clause,'" Barnes said.

The jury awarded $894,000 for breach of contract and $2.5 million for misrepresentation.

Barnes noted that in a post-verdict interview one of the jurors asked rhetorically, "Who reads the fine print?"

Published: Mon, Sep 5, 2011

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