The Doctors Company v. Women’s Healthcare Associates
August 5, 2020
Defendant’s insurance company filed a declaratory judgment action to determine whether its coverage of defendant-policyholder applied to plaintiff’s pending breach of contract claim. Plaintiff-patient and defendant-practice group entered into a service contract which provided that defendant would “participate in the Virginia Birth-Related Neurological Injury Compensation Program…and inform [plaintiff] if they ceased participating in the Birth Injury Fund.” In consideration for this promise, plaintiff agreed to waive any future medical malpractice claims that might arise from birth-related neurological injuries. At the time of the birth, defendant failed to pay into the fund or notify plaintiff of this failure. Moreover, during the delivery, the defendant’s negligence caused a birth-related neurological injury. Plaintiff filed an action alleging: (1) a material breach of contract for defendant’s failure to pay into the fund; (2) that their child suffered a compensable injury under the fund, and (3) that due to the breach of contract plaintiff would not be compensated under the fund. The insurance company claimed that it was not liable for damages as defendant’s policy only covered damages that resulted from “professional services” rendered or omissions made by the defendant. On appeal the Court disagreed and held that the alleged breach – non-participation in the fund at delivery – and the resulting damages could not have occurred without the rendering of professional services (i.e. the delivery of the child). In particular, the professional services “were a necessary element in the chain of causation [in defendant’s] failure to participate in the fund as represented.” Because damages were a result of defendant’s professional services, the damages were covered under the policy.