When Is One “Medical Occurrence” Actually Two?

Medical malpractice insurance experts take note: the definition of “medical occurrence” in an insurance policy may be as straightforward as you think.

In John Patty, D.O., LLC v. Missouri Professional Mutual Physicians Professional Indemnity Ass’n,[1] an osteopathic doctor who specialized in obstetrics had been treating a woman throughout her pregnancy when she developed complications in her third trimester. The doctor admitted the patient to the hospital to better monitor the health of both the mother and fetus.

Despite the fact that her symptoms did not improve, the patient was discharged from the hospital after four days. She returned to the obstetrician’s office two days later, but he did not recommend any additional treatment. Three days later, the patient’s health declined dramatically. The obstetrician could not detect the patient’s blood pressure, and there was absent fetal movement with a declining heart rate. The OB decided to perform an emergency C-section in his office, which lacked staffing and equipment for the procedure. The child was delivered with depressed cardiac and respiratory function, and the obstetrician’s office did not have the apparatus necessary to resuscitate the child. Both the mother and child were transferred to a hospital in critical condition and suffered permanent injuries requiring lifetime care and treatment.

The family filed a medical malpractice suit against the obstetrician, and this led the obstetrician to file a declaratory judgment against his own insurer—the defendant in this case—Missouri Professionals Mutual Physicians Professional Indemnity Association.  The declaratory judgement was to determine the extent of liability coverage in the suit against him. The obstetrician’s medical malpractice insurance policy provided coverage of up to $1 million per “medical occurrence.” The obstetrician asserted that because there were two victims of negligence, there were two separate medical occurrences that mandated coverage, but the defendant insurer argued that the malpractice claims arose from a single occurrence.

The parties settled before the declaratory judgment decision was handed down. In the agreement, the plaintiff’s in the medical malpractice claim agreed to discharge their claims against the obstetrician and the defendant insurer pursuant to the insurer paying the “maximum limit” of the insurance policy which was contingent on the outcome of the declaratory judgment.

The trial court ruled that the mother and child’s claims together constituted a single “medical occurrence” and granted summary judgment for the insurer, who was responsible for one $1 million claim.  However, the Missouri Court of Appeals saw things differently. The court noted that the negligence claims arose from three discrete instances: the patient’s prenatal care, the emergency C-section, and the negligent care provided to the child after it was born. According to the court, under the terms of the insurance policy, the child was a distinct individual separate from its mother who suffered an injury after birth – in other words, a separate medical occurrence. Each occurrence would require its own liability limit. Ruling in favor of the plaintiff obstetrician, the court required the insurer to double the limit on the liability coverage.

In the field of obstetrics, one patient nearly always becomes two. That means that this  case — even though it occurred at the state level — has the potential to change medical negligence theory and insurer liability across the country.

[1] John Patty, D.O., LLC v. Missouri Prof’ls Mut. Physicians Prof’l Indemn. Ass’n, No. ED106747 (Mo. Ct. App. Apr. 23, 2019).