Ninth Circuit Holds Notice-Prejudice Rule Inapplicable to Claims-Made-And-Reported Policies (JD Supra)

Ninth Circuit Holds Notice-Prejudice Rule Inapplicable to Claims-Made-And-Reported Policies

  Wednesday, May 5th, 2021 Source: JD Supra

Applying Montana law, the Ninth Circuit Court of Appeals has held that a claim made during one claims-made policy period but not noticed until a second policy period was not covered under either policy. Capitol Specialty Ins. Corp. v. Big Sky Diagnostic Imaging, Inc., 2021 WL 1564349 (9th Cir. Apr. 21, 2021).

The court also ruled that the notice-prejudice rule does not apply to claims-made-and-reported policies when the claim is reported after the policy period.

The insured, a diagnostic imaging center, sought insurance coverage for a medical malpractice lawsuit filed against it in the second of two consecutive claims-made policy periods.

During the prior policy period, the claimant had filed an application with the Montana Legal Panel for review, which under Montana law is a prerequisite to filing a medical malpractice lawsuit.

The insurer denied coverage under the policy issued for the 2015-2016 policy period (the 2015 Policy) because the insured did not provide notice of the application with the Panel during the 2015 Policy’s policy period and denied coverage under the policy issued for the 2016-2017 policy period (the 2016 Policy) based on the 2016 Policy’s prior knowledge exclusion.

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