2008-467, Exeter Hospital, Inc. v. New Hampshire Insurance Guaranty Association

The respondent, New Hampshire Insurance Guaranty

and Mark D. Robins orally), for the respondent. Nixon Peabody LLP, of Manchester (Courtney Q. Brooks & a. on the brief,

and Karyl R. Martin on the brief, and Mr. Shirley orally), for the petitioner. to press. Errors may be reported by E-mail at the following address: Sheehan Phinney Bass + Green, P.A., of Manchester (James Q. Shirley

NEW HAMPSHIRE INSURANCE GUARANTY ASSOCIATION

page is: http://www.courts.state.nh.us/supreme. v.

editorial errors in order that corrections may be made before the opinion goes No. 2008-467 Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Rockingham Readers are requested to notify the Reporter, Supreme Court of New ___________________________

THE SUPREME COURT OF NEW HAMPSHIRE

a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as the rule that an employer is generally not liable for the negligence of an

p. 2 summary judgment.

was “vicariously liable” for his negligence under any of the three exceptions to

exhaust “solvent insurance”

declaratory judgment seeking indemnification. Both parties moved for duty to exhaust Dr. Wharton’s insurance coverage. Exeter petitioned for reimburse any part of Exeter’s settlement contribution, citing Exeter’s statutory 2

Wharton was an independent contractor. It found no indication that Exeter

minus the $50 statutory deductible.” It also reminded Exeter of its duty to oppressive conduct (Counts III, VI, and IX). maximum potential recovery from NHIGA [on this claim] would be $299,999 injuries of Mr. Smith.” NHIGA, however, reminded Exeter that, by statute, “the

exceeded the $299,999 NHIGA maximum coverage. NHIGA refused to into the shoes” of PHICO.

at Portsmouth Hospital were unsuccessful and Smith died days later. The trial court ruled in favor of Exeter. It first concluded that Dr. ventricle became lacerated during the procedure. Efforts to repair the damage obstructions within Smith’s previously implanted vein grafts. Smith’s right negligence and wrongful death (Counts II, IV, VII); and wanton, malicious or against each defendant a violation of informed consent (Counts I, V, VIII); claim against Exeter under [its policy with PHICO] for the alleged bodily facilities or staff to treat . . . complications.” The writ of summons asserted

amount, contributed part of the settlement. Exeter paid the balance, which 2002 due to insolvency, triggering certain duties on the part of NHIGA to “step Smith’s estate. Dr. Wharton, who had sufficient insurance to cover the entire Dr. Wharton and Exeter eventually reached a settlement agreement with

2001, Dr. Wharton performed a balloon dilation at Exeter in order to cure

NHIGA informed Exeter by letter that “there is potentially one covered that “Smith was not advised of [the] risks” and that “Exeter Hospital lacked the

Commonwealth Court of Pennsylvania ordered PHICO liquidated in February had institutional liability insurance through PHICO Insurance Company. The Dr. Wharton had professional liability insurance through ACA. Exeter

He performed various procedures over the course of Smith’s treatment. In May

estate alleged that Dr. Wharton unreasonably undertook a high risk procedure, administratrix of his estate against Dr. Wharton, ACA and Exeter. Smith’s Smith’s wife brought a medical malpractice action in March 2003 as

Dr. Wharton began treating Daniel Smith for exertional angina in 2000.

relationship with Exeter as that of an independent contractor. cardiac catheterization laboratory. The agreement describes Dr. Wharton’s p. 3 Smith a non-delegable duty.

could have attributed Dr. Wharton’s liability to Exeter because Exeter owed to to avoid financial loss to claimants or policyholders because of the

judgment as a matter of law.

apparent authority to establish vicarious liability; and (4) the Smith estate certain insurance policies to avoid excessive delay in payment and contractor; (3) the Smith estate could nevertheless invoke the doctrine of evidence to conclude as a matter of law that Dr. Wharton was an independent material fact exists, we determine whether the moving party is entitled to

similar statutes. scheme, and, finally, by looking for guidance to other states’ interpretations of upon its language, then by considering the context of the overall statutory

to provide a mechanism for the payment of covered claims under

the same claim against Exeter and Dr. Wharton; (2) there was insufficient party in its capacity as the non-moving party and, if no genuine issue of The Guaranty Act is intended

OB/GYN, 154 N.H. at 556. affirm on the basis of slightly different reasoning.” $299,999 of the settlement agreement payment.”

142 N.H. 573, 576 (1998). We interpret the Guaranty Act by focusing first decided ultimately by this court. N.H. Ins. Guaranty Assoc. v. Pitco Frialator, Act (Guaranty Act), RSA ch. 404-B. The interpretation of a statute is to be requires interpretation of the New Hampshire Insurance Guaranty Association

exhaustion requirement within RSA 404-B:12, I: (1) the Smith estate alleged judgment rulings, we consider the evidence in the light most favorable to each Ins. Co., 129 N.H. 249, 251 (1987). In reviewing the superior court’s summary

“While we conclude that the trial court reached the correct result, we from NHIGA and that “NHIGA . . . is obligated to reimburse Exeter Hospital for

more closely aligned with our decision in

On appeal, NHIGA advances four reasons why Exeter is subject to the

had no duty to exhaust Dr. Wharton’s insurance before seeking reimbursement Guaranty Assoc., 154 N.H. 553 (2006), the trial court concluded that Exeter Hosp., 154 N.H. 571 (2006), than OB/GYN Assocs. of S.N.H. v. N.H. Ins.

negligent for its operation of the hospital.” Reasoning that the dispute was and Dr. Wharton overlapped in some respects, Exeter “alone is alleged to be The trial court further noted that, although the claims against Exeter

nondelegable duty”). inherently dangerous; and (3) instances in which the employer is under a instructing or supervising the contractor; (2) employment for work that is 336 (2002) (listing exceptions as “(1) negligence of the employer in selecting, independent contractor. See Lawyers Title Ins. Corp. v. Groff, 148 N.H. 333, of any recovery under such insurance policy. p. 4 a covered claim under this chapter shall be reduced by the amount

exhaust first his right under such policy. Any amount payable on

B:12, I; insurer which is also a covered claim . . . shall be required to against [a solvent] insurer” that also constitutes “a covered claim.” RSA 404-

triggering exhaustion requirement). see Elliot, 154 N.H. at 575 (discussing the two statutory prerequisites provision in an insurance policy other than a policy of an insolvent By its terms, the Guaranty Act requires exhaustion for each “claim

Recovery” provision of RSA 404-B:12, which provides, in relevant part: at 558 (quotation omitted). windfall by virtue of an insurance company’s insolvency.” OB/GYN, 154 N.H. RSA 404-B:12, I. “[This] provision prevents claimants from double recovery or against NHIGA.” of its obligation on the covered claims,” RSA 404-B:8, I(b). of the covered claims,” RSA 404-B:8, I(a), and “deemed the insurer to the extent action.” the existence and extent of NHIGA’s obligation to defend and indemnify in that

which have been paid by the insured.” Any person having a claim against an insurer under any

The section of the Guaranty Act at issue is the “Nonduplication of

Id. at 578-79.

NHIGA’s payment obligation with respect to the insured’s reimbursement claim Thus, our inquiry is limited to determining “the existence and extent of through insurer assessments, RSA 404-B:8, I(c). It is “obligated to the extent Id. NHIGA does not contend that it had no duty to defend Exeter.

first examine the underlying action brought against the insured and determine

liability insurance, obligations of NHIGA in cases involving third-party claims against the insured We normally conduct a two-part test “in order to determine the payment

framework of NHIGA). cost of such protection among insurers. Ins. Guaranty Assoc., 151 N.H. 590, 598-99 (2004) (discussing statutory

NHIGA is “a nonprofit unincorporated legal entity,” RSA 404-B:6, funded

[its] purpose,” RSA 404-B:4.

RSA 404-B:2. RSA chapter 404-B applies broadly to many forms of direct

of insurer insolvencies, and to provide an association to assess the insolvency of an insurer, to assist in the detection and prevention assert a claim against Exeter for negligent supervision of Dr. Wharton.

p. 5 Smith’s surgery to take place at its facilities, the writ can also fairly be read to variety of direct negligence theories against Exeter based upon permitting without on-site cardiothoracic surgical backup.” In addition to alleging a

procedure performed by Dr. Wharton] . . . in non-emergent patients . . .

was a departure from good and accepted practice for Exeter . . . to permit [the causing . . . [d]amages.” The plaintiff’s pretrial statement elaborated that “[i]t fault against Dr. Wharton. care, knowledge and skill of the average hospital . . . [and] breached its duty against an insurer,” RSA 404-B:12, I, because it duplicates the assertions of such an agency relationship existed, any vicarious liability is clearly a “claim the supervision and direction of and as an employee, agent and/or servant of Robbins v. Seekamp, 122 N.H. 318, 322 (1982) (plaintiff’s failure to use words Paragraph two of the writ of summons alleges that Dr. Wharton “acted under Cf.

B:12, I; which covered claims, if any, are also “claim[s] against an insurer.” RSA 404factual allegations and legal assertions in the Smith estate action to determine

paragraph forty broadly avers that Exeter “had a duty to exercise the degree of . . . Exeter.” After reiterating this allegation in paragraph thirty eight, Wharton’s agency relationship with Exeter. Assuming without deciding that

Count VII, however, advances other theories of liability unique to Exeter. insurer,” RSA 404-B:12, I, subject to exhaustion of his insurance. are based upon identical factual allegations and legal assertions.”). any theory of direct liability[,] . . . [t]he claims . . . are the same because they underlying action are covered claims. Therefore, we proceed to examine the discussion to this claim.. . . [and] no acts or omissions by [the insured codefendant are] alleged, nor . . . of liability . . . asserted against [the insured codefendant] is vicarious liability

Count VII can be read to assert vicarious liability on the basis of Dr.

N.H. at 559, asserted against Dr. Wharton, it constitutes a “claim against an VII comprises the “same claim[],” Elliot, 154 N.H. at 577; see OB/GYN, 154

404-B:5, IV. NHIGA does not dispute that the relevant claims in the litigants dispute only Count VII for negligence and wrongful death, we limit our applies issued by an insurer, if such insurer . . . is declared insolvent.” RSA OB/GYN, 154 N.H. at 558; see Pitco Frialator, 142 N.H. at 578. Because the in excess of the applicable limits of an insurance policy to which this chapter insured’s claim against a solvent insurer and the third-party claim against the within the Guaranty Act. We have construed the term to contemplate “both an “[C]laim against an insurer,” RSA 404-B:12, I, is not specifically defined

see Elliot, 154 N.H. at 577; OB/GYN, 154 N.H. at 559.

claim, in excess of $50 . . . which arises out of and is within coverage and not “Covered claim” is defined within the Guaranty Act as “a net unpaid p. 6 6 conclusion. owed to Smith a non-delegable duty would, if anything, support this

than $300,000,” RSA 404-B:8, I(a). Indeed, NHIGA’s argument that Exeter

BRODERICK, C.J., and DALIANIS and DUGGAN, JJ., concurred.

the extent of the covered claim[],” RSA 404-B:8, I(a), as Exeter’s “deemed . . . (2002). was charged with negligent pre-natal care). NHIGA is therefore “obligated to at 33 p. 6 6; Herman v. Monadnock PR-24 Training Council, 147 N.H. 754, 758-59 supervision of both agents and independent contractors. See Groff, 148 N.H. employer is subject to direct liability for the negligent selection, instruction or court’s finding that Dr. Wharton was an independent contractor, because an party is not the vicarious liability of the doctrine of Wharton and, accordingly, is not a “claim against an insurer,” RSA 404-B:12, I. We do not reach NHIGA’s remaining arguments, concerning the trial attributed to Exeter, it does not constitute the same claim asserted against Dr.

liability as a result of the misconduct of the employee. charged with negligence during and after baby’s delivery but only one hospital though overlapping, were not the same claim where both hospitals were See Elliot, 154 N.H. at 577 (holding that two claims for medical negligence, brought against an employer where the employee harms a third

Because Count VII alleges one or several bases for direct fault uniquely

(1995); see Cutter v. Town of Farmington, 12 p. 6 6 N.H. 836, 840 (1985). 14 P. Loughlin, New Hampshire Practice, Local Government Law § 1041, at 297

for negligent hiring, training and supervision encompass direct superior, but a separate theory of employer liability. Thus, claims

The basis for a claim of negligent employment or supervision

manufacture where language tracked statute supplying cause of action). “products liability” in pleadings did not preclude claim for negligent design and