Surgery Center at 900 North Michigan Avenue, LLC v. American Physicians Assurance Corp., Inc.

SC, an outpatient surgical center, permits outside physicians to perform day surgery at its facility. Its insurance limited APA’s liability to $1 million per claim. In 2002, Dr. Hasson, an outside physician, performed outpatient laparoscopic surgery on Tate at SC. Hasson did not see Tate or sign her discharge instructions before SC released her; SC’s anesthesiologist discharged Tate, giving Tate's boyfriend discharge instructions. Days later, Tate checked into the hospital with a perforated bowel that rendered the previously-healthy 34‐year‐old a quadriplegic. Tate sued Hasson and SC. APA hired attorneys to defend SC. APA set the “Reserve” (money the Michigan Department of Insurance required APA to put aside to cover an adverse verdict) at $560,000. APA believed the damages could exceed the policy limit but that SC was not likely to be found liable. In 2007, APA rejected Tate's offer to settle for policy limits. Hasson’s insurer settled for his policy limit ($1 million). After the Illinois Appellate Court remanded the issue of whether SC’s nursing staff breached the standard of care, APA raised the Reserve to $1 million, stating that it still believed the case was defensible. Before the second trial, APA rejected Tate's second settlement demand for the policy limit. The jury returned a $5.17 million verdict. SC then sued APA for bad faith. The Seventh Circuit affirmed judgment as a matter of law in favor of APA. SC did not establish that anyone involved in litigating the case believed there was more than a mere possibility SC would be found liable; the mere possibility of liability is insufficient under the Illinois Supreme Court’s reasonable probability standard. View "Surgery Center at 900 North Michigan Avenue, LLC v. American Physicians Assurance Corp., Inc." on Justia Law