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Oregon
Pennsylvania
Texas
Wisconsin
Hoffman Construction Co. of Alaska v. Fred S. James & Co. of Oregon, 838 P.2d
703, 313 Or. 464 (1992). The Supreme Court of Oregon held that an umbrella
liability insurer was not obligated to pay a claim on a loss which was less than
the underlying policy limit. The court analyzed the excess policy, which limited
coverage to losses in excess of the "underlying limits." The term "underlying
limits" was defined as the "amount recoverable under the underlying
insurance." The court refused to accept the plaintiff's interpretation that
"amounts recoverable" meant amounts which could have been recovered if
the underlying insurer had not become insolvent. Instead, the court concluded
that the excess coverage only applied to the extent the primary insurance was
exhausted on account of payment of claims.
Strickler v. Desai, M.D., 571 Pa. 621, 813 A.2d 650 (2002). Dr. Desai was sued in a
medical malpractice action. The Doctor’s insurer was declared insolvent and the
Pennsylvania Property and Casualty Insurance Guaranty Association (“PPCIGA”)
became obligated to cover the claims and defend the Doctor. After the
insolvency, the plaintiffs entered into and a court approved settlement. PPCIGA
refused to fund the settlement because it would allow the plaintiffs to get a
double recovery. The plaintiffs demanded medical expenses in their complaint,
but later admitted they received medical expenses from Aetna, their health
insurer. PPCIGA claimed it was entitled to reduce the amount of its obligation by
the amount the plaintiffs received from Aetna, who already paid medical costs
in excess of the amount PPCIGA was obligated to pay. Since Aetna already
reimbursed the plaintiffs for medical expenses, PPCIGA argued it would result in
duplicate payments for the same expense. The court determined that
“[b]ecause [plaintiffs] sought medical expenses in the complaint and settled all
of the claims in the complaint, we deem the settlement to include amounts
attributable to medical expenses.” Id. at 631. The court affirmed the lower
court’s ruling that PPCIGA was entitled to offset the amount of medical
expenses Aetna paid from the amount of its liability.
Brodhead v. Dodgin, 824 S.W.2d 616 (Tex App.‐‐Austin 1991). Upon rejection of
their proof of claim by the receiver of Mission National, the insolvent excess
carrier, injured claimants sued the receiver in the liquidation proceeding. The
receiver argued for dismissal, claiming the action was an intervention in the
liquidation proceeding not permitted by the insurance code. The court
severed the action from the liquidation proceeding, and assigned it a separate
suit number. The court held that the provision of the insurance code which
required the filing of a separate suit in the same court in which the liquidation
proceeding was pending was not a jurisdictional statute, but rather a
mandatory and exclusive venue provision. Accordingly, the trial court had
jurisdiction to order the action severed. The court rejected the receiver's policy
defenses finding that when an insurance carrier denies all liability and refuses
to defend, the receiver for that carrier cannot thereafter rely upon policy
defenses to defeat the claim. The court also rejected the receiver's claim that
because the insolvent primary carrier had not paid its policy limits, the
insolvent excess carrier was not liable.
In the Matter of the Ancillary Liquidation of Mission Ins. Co., Azco Hennes‐
Sanco, Ltd. v. Wisconsin Ins. Sec. Fund, 177 Wis. 2d 563, 502 N.W.2d 887 (Wis.
Ct. App. 1993). Mission was Azco’s excess liability insurer, and Azco sought
payment from the Wisconsin Insurance Security Fund for its defense costs
when Mission became insolvent. The court rejected the insured’s argument
that because the total amount of the claims against Azco exceeded the
primary insurance limit, Mission became responsible under its policy to
defend the cases against Azco. The court held that the language of the
policy imposed upon Mission a duty to defend suits against Azco stemming
from occurrences under its policy but not covered under the underlying