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Allied, Zurich not obliged to reimburse doctors, hospital system



Allied World Assurance Co. Ltd. and Zurich Insurance Corp. NA units are not required to reimburse a hospital system and doctors under their excessive medical malpractice policies for the birth of a girl suffering from cerebral palsy and other problems, a federal appeals court said Friday to confirm a subpoena.

Dr. Erica Kesselman gave birth to the baby, who also suffers from brain damage and "mental disabilities and defects", at a hospital run by Putnam, Connecticut-based Day Kimball Healthcare Inc. in 2013, according to the underlying judgment of the U.S. District Court in Bridgeport, Connecticut in Day Kimball Healthcare Inc., Erica J. Kesselman, MD v Allied World Surplus Lines Insurance Co., FKA Darwin Select Insurance Co., Steadfast Insurance Co.

A surgical sponge was also left in the mother requiring surgical removal that caused inflammation, urinary tract infection and deformity, according to the district court ruling.

American International Group Inc. unit Lexington Insurance Group, which provided primary coverage and defends the hospital system and Dr. Kesselman in the underlying disputes over medical malpractice in the state court is not a party to the lawsuit.

The district court found that the excess insurers were not required to prove ideological coverage under their policies and was confirmed by a panel of three judges at the 2nd U.S. Circuit Court of Appeals in New York.

The hospital and the doctor could not get coverage for professional claims because there had been no current notification according to the claims made under the policy, the verdict said.

Instead, the hospital system and Dr. Kesselman had sought coverage under an insurance provision for claims related to employee benefits, the ruling said.

The panel agreed with the lower court. that this was not covered by the surplus policy, which "unequivocally provides Lexington policy with excessive coverage only for claims related to employee benefits". "It was stated in confirming the judgment of the lower court.

Lawyers in the case did not respond to a request for comment. Catalog

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