Settlements

Negligence-Professional Liability

Insurer not liable to insured for failing to settle malpractice action.

Archer v. Medical Protective Co. of Fe Wayne, Ind.

No. 07-05-0258 (Tex. App. July 13, 2006)

             The Texas Court of Appeals ruled an insurer is not liable for failing to settle a medical malpractice action brought against its insured where the insured ultimately prevailed in the action.

            One of Dr. Emily Archer’s patients sued her for medical malpractice. Prior to trial, the patient supposedly offered to settle the litigation for a sum within policy limits. Archer’s insurer, Medical Protective Co. of Fort Wayne, Ind. (MPC), allegedly refused to settle.

            Thereafter, a jury found Archer had committed malpractice and awarded damages exceeding her policy limits. The trial court entered judgment upon the verdict, which judgment Archer appealed. The appeals court reversed the judgment and rendered its own judgment absolving Archer of liability.

            Archer then sued MPC to recover for damages purportedly relating to their failure to settle the underlying medical malpractice case before trial. After the trial court granted the summary judgment motions of MPC, Archer appealed.

            The appeals court found the trial court did not err in entering summary judgment for MPC. As a matter of law, an insurer who refuses to settle a claim within its policy limits before trial is not negligent if its insured is absolved of liability for the underlying claim. Thus, because Archer eventually won the underlying suit initiated by her patient, she had no claim against MPC.

Stafford Texas Insurance Law & Litigation Alert
August 31, 2006