The Superior Court of the State of California, Santa Barbara County has issued a coverage ruling in Cottage Health System et al. v. Travelers Casualty and Surety Co. of America et al.
The case revolved around Cottage and a group of contracted neurosurgeons who were accused of violating antitrust laws while conspiring to block a second third party physician group from practicing at the health system. As Cottage Health System’s insurance carrier Travelers initially provided defense coverage but later denied the claim.
The coverage argument centered on whether third party physicians met the definition of “insured person” under the Travelers’ Directors and Officers insurance policy. The wording, which is standard in most health care D&O policies, provided coverage to independent contractors who operated under the “exclusive direction” of the named insured. Travelers denied coverage based on the physicians not meeting that definition but lost the argument in court.
The ruling will likely be appealed and further litigation will continue to clarify coverage.
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