• Ex-Employer Liable for Failure to Maintain Malpractice Insurance
  • July 17, 2008 | Author: Leigh Ann Lauth O'Neill
  • Law Firm: Krieg DeVault LLP - Indianapolis Office
  • The Indiana Court of Appeals recently held that a genuine issue of material fact existed as to whether a physician's former employer orally promised to continue her malpractice insurance after her termination and whether her reliance on such promise was reasonable. 

    Dr. Elizabeth Riggs was employed by Lafayette Emergency Care, P.C. ("LEC").  Although LEC had not agreed in writing to continue to pay Dr. Riggs' malpractice insurance after her employment term ended, the Court determined that LEC could be estopped from denying that its president had orally promised to maintain the policy.  Despite the alleged oral promise, LEC instructed the insurance company to cancel Dr. Riggs' malpractice policy the day after her employment was terminated.  Three years later, when Dr. Riggs was named in a malpractice suit, she learned that the policy LEC had maintained during her employment had lapsed.  Dr. Riggs then filed a claim against LEC alleging breach of an alleged oral promise to maintain such insurance.  The trial Court granted LEC's motion for summary judgment and Dr. Riggs appealed. 

    On appeal, Dr. Riggs argued that a genuine issue of material fact existed as to whether the promise had been made and whether the termination agreements the parties had signed, which released LEC of all claims Dr. Riggs might have against them, released LEC from its obligation to maintain her malpractice insurance.  LEC argued that evidence of the alleged oral promise was barred. 

    The Court held that because the termination agreements did not have integration clauses excluding other and prior agreements from also being considered, the alleged promise was not barred from consideration.  With regard to the claim of estoppel, the Court found that injustice could in fact only be avoided if the alleged promise was enforced.  Since the parties disagreed as to whether a promise was ever made, and as to whether Dr. Riggs' reliance on the alleged promise was reasonable, there were genuine issues of material fact which precluded summary judgment.