Lexington Ins. Co. v. Lexington Healthcare Group, Inc. ( 2014 )

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LEXINGTON INSURANCE COMPANY v. LEXINGTON
HEALTHCARE GROUP, INC., ET AL.
(SC 18681)
(SC 18682)
Rogers, C. J., and Norcott, Palmer, Zarella, Eveleigh, McDonald and
Espinosa, Js.*
Argued November 30, 2012—officially released January 28, 2014
Jeffrey R. Babbin, with whom were Amber J. Hines
and, on the brief, Michael Menapace, for the appellant-
appellee in Docket No. SC 18681 and cross appellant
in Docket No. SC 18682 (plaintiff).
Sean K. McElligott, with whom were Van A. Stark-
weather and Brian J. Ladouceur, Jr., for the appellees-
appellants in Docket No. SC 18681 (defendant Marion
J. Boynton, coadministratrix of the estate of Elizabeth
M. Arata, et al.).
Philip J. O’Connor, for the appellee-appellant in
Docket No. SC 18681 and cross appellee in Docket No.
SC 18682 (defendant Nationwide Health Properties,
Inc.).
Opinion
ROGERS, C. J. This case requires us to interpret vari-
ous provisions of a professional liability insurance pol-
icy to determine the amount of coverage available when
the same general event has given rise to a large number
of claimants against the policy. On February 26, 2003,
multiple residents of Greenwood Health Center (Green-
wood), a Hartford nursing home, tragically died or were
injured when the facility was set ablaze by another
resident and rescue efforts by staff members fell short.
As a result, thirteen negligence actions seeking damages
for wrongful death or serious bodily injury were filed
by some of the victims’ personal representatives against
Greenwood, Nationwide Health Properties, Inc.
(Nationwide),1 the owner and lessor of the property
housing Greenwood, Lexington Healthcare Group, Inc.
(Lexington Healthcare), the lessee of that property, and
Lexington Highgreen Holding, Inc. (Highgreen), the
operator of Greenwood. This case concerns the amount
of liability insurance coverage available for these
claims. The plaintiff, Lexington Insurance Company,2
brought this declaratory judgment action against Lex-
ington Healthcare, which is the insured party under a
general and professional liability insurance policy
issued by the plaintiff, as well as Highgreen, Nationwide
and the victims’ personal representatives3 (individual
defendants).4 Nationwide and most of the individual
defendants each filed counterclaims in regard to the
policy, also seeking declaratory judgments. Following
the parties’ filing of cross motions for summary judg-
ment, the trial court determined the amount of coverage
available under the policy and rendered judgment
accordingly.
The plaintiff appeals from the judgment of the trial
court determining the available coverage. The plaintiff
claims that the trial court misconstrued the policy lan-
guage pertaining to ‘‘related medical incidents’’ and the
endorsement relating to the ‘‘[a]ggregate [p]olicy
[l]imit,’’ thereby providing more coverage for the indi-
vidual defendants’ claims than that to which they were
entitled. Four of the individual defendants have cross
appealed,5 claiming that the trial court’s interpretation
of the policy’s self-insured retention endorsement
resulted in an improper reduction of the available cover-
age. We disagree with the plaintiff’s claim that the trial
court misconstrued the policy language concerning
related medical incidents, but agree with its claim that
the court improperly interpreted the endorsement relat-
ing to the aggregate policy limit. We further agree with
the individual defendants that the court improperly
applied the self-insured retention endorsement to
reduce the available coverage. Accordingly, we affirm in
part and reverse in part the judgment of the trial court.6
The following facts and procedural history are rele-
vant to these appeals. The individual defendants, in the
underlying actions, each alleged multiple and varying
specifications of negligence against Lexington Health-
care and Highgreen. Some of the individual defendants’
claims related to Lexington Healthcare’s and High-
green’s choice to admit into Greenwood the individual
who had started the fire and, thereafter, their failure
to place, supervise and treat her properly and to disal-
low her from possessing cigarette lighters or smoking
cigarettes independently. Other of the individual defen-
dants’ claims concerned general safety and emergency
failures including, but not limited to: insufficient
staffing; inadequate sprinklers, fire extinguishers and
smoke detectors; lack of training in fire response and
evacuation procedures; neglect to adhere to relevant
rules, codes and standards; and a dangerously con-
structed, equipped and furnished facility. Specific alle-
gations of negligence on the night of the fire also were
raised, such as staff members’ failures to respond prop-
erly to the fire by employing fire extinguishers and by
closing particular doors and windows.
The policy issued by the plaintiff to Lexington
Healthcare provided both general liability and profes-
sional liability coverage for Lexington Healthcare’s
seven nursing home facilities, one of which was Green-
wood. It is undisputed on appeal that only the profes-
sional liability coverage is applicable to the individual
defendants’ negligence claims. As to the amount of cov-
erage available for those claims, the trial court found
that: (1) for purposes of applying the policy’s $500,000
per medical incident limit for professional liability cov-
erage, the acts, errors or omissions underlying each
individual defendant’s injuries or death constituted sep-
arate medical incidents and did not collectively com-
prise related medical incidents, in which case a single
$500,000 limit would have applied; (2) the total amount
of professional liability coverage available under the
policy for all of the individual defendants’ claims was
the $10 million ‘‘[a]ggregate [p]olicy [l]imit’’ provided
via an endorsement to the policy, rather than the $1
million ‘‘[a]ggregate [l]imit’’ for professional liability
coverage stated in the policy declarations; and (3) a
$250,000 ‘‘[s]elf [i]nsured [r]etention per [o]ccurrence’’
described in another endorsement to the policy applied
to reduce the $500,000 per medical incident coverage
to $250,000 per medical incident. This appeal and cross
appeal followed. The plaintiff argues on appeal that
the trial court’s first two policy interpretations were
improper, while the individual defendants take issue
with the court’s third interpretation.
‘‘As a preliminary matter, we set forth the applicable
standard of review. Summary judgment shall be ren-
dered forthwith if the pleadings, affidavits and other
proof submitted show that there is no genuine issue as
to any material fact and that the moving party is entitled
to judgment as a matter of law. . . . The scope of our
appellate review depends upon the proper characteriza-
tion of the rulings made by the trial court. . . . When
. . . the trial court draws conclusions of law, our
review is plenary and we must decide whether its con-
clusions are legally and logically correct and find sup-
port in the facts that appear in the record.’’ (Internal
quotation marks omitted.) Ugrin v. Cheshire, 307 Conn.
364, 389, 54 A.3d 532 (2012).
The general principles that guide our review of insur-
ance contract interpretations are well settled. ‘‘[C]on-
struction of a contract of insurance presents a question
of law for the court which this court reviews de novo.
. . . An insurance policy is to be interpreted by the
same general rules that govern the construction of any
written contract . . . . In accordance with those prin-
ciples, [t]he determinative question is the intent of the
parties, that is, what coverage the . . . [insured]
expected to receive and what the [insurer] was to pro-
vide, as disclosed by the provisions of the policy. . . .
If the terms of the policy are clear and unambiguous,
then the language, from which the intention of the par-
ties is to be deduced, must be accorded its natural and
ordinary meaning. . . . Under those circumstances,
the policy is to be given effect according to its terms.
. . . When interpreting [an insurance policy], we must
look at the contract as a whole, consider all relevant
portions together and, if possible, give operative effect
to every provision in order to reach a reasonable overall
result. . . .
‘‘In determining whether the terms of an insurance
policy are clear and unambiguous, [a] court will not
torture words to import ambiguity where the ordinary
meaning leaves no room for ambiguity . . . . Similarly,
any ambiguity in a contract must emanate from the
language used in the contract rather than from one
party’s subjective perception of the terms. . . . As with
contracts generally, a provision in an insurance policy
is ambiguous when it is reasonably susceptible to more
than one reading. . . . Under those circumstances, any
ambiguity in the terms of an insurance policy must be
construed in favor of the insured because the insurance
company drafted the policy.’’ (Internal quotation marks
omitted.) Johnson v. Connecticut Ins. Guaranty Assn.,
302 Conn. 639, 643, 31 A.3d 1004 (2011).
We now turn to the claims raised on appeal. Addi-
tional facts and procedural history will be provided
where pertinent to those claims.
I
The plaintiff claims first that the trial court improp-
erly interpreted the phrase ‘‘related medical incidents’’
as used in the policy, thereby affording greater coverage
for the individual defendants’ claims than the parties
to the policy had intended. According to the plaintiff,
the individual defendants’ claims arose from ‘‘related
medical incidents,’’ because all of their injuries or
deaths stemmed from the same root cause, namely,
the admission of the individual who started the fire to
Greenwood and the failure to supervise her properly.
The plaintiff argues, therefore, that a single policy limit
applies to all of the individual defendants’ claims collec-
tively rather than to each claim individually. We are
not persuaded.
The following additional facts and procedural history
are relevant. The declarations page of the policy pro-
vides that there shall be a $500,000 limit for professional
liability coverage for ‘‘[e]ach [m]edical [i]ncident.’’
‘‘Medical [i]ncident’’ is defined by the policy as ‘‘any
act, error or omission in the providing of or failure to
provide professional services.’’ ‘‘Professional [s]er-
vices,’’ in turn, are defined in relevant part as ‘‘[m]edical,
surgical, dental, nursing or other health care services
including but not limited to the furnishing of food or
beverages in connection with such services . . . .’’
Finally, within the section of the professional liability
part of the policy captioned ‘‘LIMITS OF INSURANCE,’’
the following is provided: ‘‘All claims arising from con-
tinuous, related, or repeated medical incidents shall
be treated as arising out of one medical incident. Only
the [p]olicy in effect when the first such claim is made
shall apply to all such claims.’’ (Emphasis added.)
The parties do not dispute that the individual defen-
dants’ claims arise from medical incidents, namely, Lex-
ington Healthcare’s acts, errors and omissions in
providing, or failing to provide, professional services,
as defined by the policy. They differ, however, as to
whether those medical incidents properly may be char-
acterized as ‘‘related’’ such that a single, $500,000 per
medical incident coverage limit applies to all of the
individual defendants’ claims.
The trial court, after examining the policy, first found
that the term ‘‘related’’ was ambiguous in that it could
refer to either a narrow or broad range of connections.
In the context of the present dispute, ‘‘related’’ could
contemplate, on the one hand, ‘‘different but connected
services delivered to a particular [individual defen-
dant],’’ or, on the other hand, ‘‘similar or related services
delivered to a number of [individual defendants].’’ More
to the point, ‘‘related’’ could encompass all of the acts,
errors or omissions that collectively led to a particular
individual defendant’s injuries or death, i.e., the con-
nected array of failures that exposed that individual to
the fire, then prevented him or her from being rescued
or otherwise protected from the fire’s effects. Alterna-
tively, ‘‘related’’ could be construed more expansively
as encompassing similar acts, errors or omissions that
ended up harming all of the individual defendants, in
particular, the admission of, and failure to supervise,
the individual who started the fire.
Because of this ambiguity, the trial court construed
the policy in favor of providing broader coverage to the
insured, concluding that the allegations underlying the
individual defendants’ claims were not ‘‘related’’ and,
therefore, did not constitute a single ‘‘medical incident’’
within the meaning of the policy limitation. Conse-
quently, the trial court held, the $500,000 per medical
incident limit applied to each individual defendant’s
claim separately and not to all of those claims collec-
tively. The court reasoned further that Lexington
Healthcare owed separate duties to each individual
defendant, each of whom was differently situated and
had different service needs, and that, during the fire
and subsequent evacuation, Lexington Healthcare had
failed to take appropriate action as to each individual
defendant in different and distinct ways.7
The plaintiff argues on appeal that the trial court
improperly found that the term ‘‘related’’ is ambiguous.
According to the plaintiff, related unambiguously has
a broad meaning and, as applied to this case, requires
aggregation of the individual defendants’ claims
because all of those claims ‘‘have a causal or logical
connection’’ to the same source, namely, ‘‘the alleged
failure to supervise the patient who started the fire
and the resultant fire.’’ Nationwide and the individual
defendants argue, to the contrary, that the phrase
‘‘related . . . medical incidents’’ is vague and ambigu-
ous and, therefore, must be construed in favor of provid-
ing more coverage to Lexington Healthcare. Moreover,
according to Nationwide and the individual defendants,
the individual defendants’ claims arose from different
medical incidents because Lexington Healthcare owed
each individual defendant a separate duty, committed
different acts of negligence as to each and caused each
discrete harm. We agree with Nationwide and the indi-
vidual defendants that the acts, errors and omissions
underlying the individual defendants’ claims are not
‘‘related’’ within the meaning of the policy.
We address at the outset the plaintiff’s argument that
the trial court improperly concluded that the term
related is ambiguous because several other courts have
determined the term to be unambiguous, and decisions
which have found the term to be ambiguous have been
undermined by later decisions, from the same or differ-
ent courts, which hold that related is unambiguous. We
are not persuaded by this argument, because ‘‘[c]ontext
is often central to the way in which policy language is
applied; the same language may be found both ambigu-
ous and unambiguous as applied to different facts.’’
Highwoods Properties, Inc. v. Executive Risk Indem-
nity, Inc., 407 F.3d 917, 923 (8th Cir. 2005). Language
in an insurance contract, therefore, must be construed
‘‘in the circumstances of [a particular] case, and cannot
be found to be ambiguous [or unambiguous] in the
abstract.’’ (Emphasis in original; internal quotation
marks omitted.) Bay Cities Paving & Grading, Inc. v.
Lawyers’ Mutual Ins. Co., 5 Cal. 4th 854, 867, 855 P.2d
1263, 21 Cal. Rptr. 2d 691 (1993); see also Doe v. Illinois
State Medical Inter-Ins. Exchange, 234 Ill. App. 3d 129,
137, 599 N.E.2d 983 (‘‘[i]n determining whether there
is an ambiguity, the clause must be read within its
factual context’’), appeal denied, 147 Ill. 2d 626, 606
N.E.2d 1225 (1992). In sum, the same policy provision
may ‘‘shift between clarity and ambiguity with changes
in the event at hand’’; (internal quotation marks omit-
ted) Bay Cities Paving & Grading, Inc. v. Lawyers’
Mutual Ins. Co., supra, 868; and one court’s determina-
tion that the term related was unambiguous, in the
specific context of the case that was before it, is not
dispositive of whether the term is clear in the context
of a wholly different matter.
Turning to the term at issue, ‘‘related’’ generally is
defined8 as ‘‘connected by reason of an established or
discoverable relation,’’ with ‘‘relation’’ meaning ‘‘an
aspect or quality . . . .’’ Webster’s Third New Interna-
tional Dictionary (2002); see also Random House Dic-
tionary (2013) (defining related as ‘‘associated;
connected’’); Black’s Law Dictionary (6th Ed. 1990)
(defining related as ‘‘standing in relation; connected;
allied; akin’’). Courts of other jurisdictions, considering
these or similar definitions, have opined that the term
related covers a broad range of connections, both
causal and logical. See, e.g., Bay Cities Paving & Grad-
ing, Inc. v. Lawyers’ Mutual Ins. Co., supra, 5 Cal. 4th
868; American Commerce Ins. Brokers, Inc. v. Minne-
sota Mutual Fire & Casualty Co., 551 N.W.2d 224, 228
(Minn. 1996); Columbia Casualty Co. v. CP National,
Inc., 175 S.W.3d 339, 348 (Tex. Civ. App. 2004). At the
same time, however, they have recognized that discrete
events have the potential to be linked in myriad ways,
and at some point, a line must be drawn to prevent
aggregation of events whose connections to each other
are simply too weak. In such cases, ‘‘a relationship
between [the] two claims, though perhaps ‘logical,’
might be so attenuated or unusual that an objectively
reasonable insured could not have expected they would
be treated as a single claim under the policy.’’ Bay
Cities Paving & Grading, Inc. v. Lawyers’ Mutual Ins.
Co., supra, 873; see also American Commerce Ins. Bro-
kers, Inc. v. Minnesota Mutual Fire & Casualty Co.,
supra, 228. When ‘‘a logical connection [becomes] too
tenuous reasonably to be called a relationship . . . the
rule of restrictive reading of broad language [in favor
of the insured] would come into play.’’ Gregory v. Home
Ins. Co., 876 F.2d 602, 606 (7th Cir. 1989). ‘‘[A] term
[specifically, related acts] should be found unambigu-
ous if the facts of the case comfortably fit within the
commonly accepted definition of the concept, but may
be ambiguous if the facts fall on the margins of a broad
reading.’’ (Internal quotation marks omitted.) High-
woods Properties, Inc. v. Executive Risk Indemnity,
Inc., supra, 407 F.3d 924.
Applying the foregoing definitions and their associ-
ated limits to the specific allegations of negligence
raised by the individual defendants, we are not con-
vinced that the various acts, errors and omissions
alleged by each individual defendant are so readily asso-
ciated with those alleged by the others that collectively,
they fit comfortably within the realm of connection
contemplated by the parties to the policy when they
agreed to aggregate related medical incidents. Each
individual defendant has raised multiple allegations of
negligence, in some cases upwards of twenty. Although
some allegations pertain to negligent supervision of
the individual who started the fire, others aver a wide
variety of different safety and response failures by Lex-
ington Healthcare. Because each individual defendant
was differently situated in terms of his or her proximity
to the fire and resultant smoke, access to an exit, and
personal health and mobility issues, the particular array
of negligent shortcomings that ultimately led to his or
her injury or death necessarily varied. Additionally, to
the extent similar acts, errors or omissions appear
across multiple complaints, they nevertheless are
alleged to have caused multiple, distinct losses to differ-
ent individuals. Overall, the medical incidents underly-
ing the individual defendants’ claims are as dissimilar
as they are alike. In sum, it is far from clear from the
policy’s use of the term ‘‘related,’’ with no more specific
definition of that term provided, that the parties
intended multiple losses suffered by multiple people,
each caused by a unique constellation of negligent acts,
errors and omissions, to be aggregated into a single
loss, for purposes of coverage limits, simply because
they shared a common, precipitating factor. Conse-
quently, like the trial court, we construe the term in
favor of providing more coverage, and hold that the
individual defendants’ claims do not arise from related
medical incidents.
Although we are unable to locate any other case
directly on point, our conclusion is consistent with deci-
sions from other jurisdictions considering whether
claims, acts, omissions or incidents are related for pur-
poses of determining coverage limits in a professional
liability policy. Overall, although courts have employed
a variety of analytical approaches; see Scott v. Ameri-
can National Fire Ins. Co., 216 F. Sup. 2d 689, 694
(N.D. Ohio 2002) (discussing various approaches); they
have tended to reach fairly predictable results, in partic-
ular on the factor of loss. To begin, when there are
multiple acts of negligence by an insured that all pertain
to the same general undertaking and also contribute to
the same loss, those acts typically are found to be
related. See, e.g., Continental Casualty Co. v. Brooks,
698 So. 2d 763, 764–65 (Ala. 1997) (attorney’s negligent
preparation of four quitclaim deeds and power of attor-
ney for same client were series of ‘‘related acts’’ because
they all led to single result, loss of title to same prop-
erty); Bay Cities Paving & Grading, Inc. v. Lawyers’
Mutual Ins. Co., supra, 5 Cal. 4th 866–73 (attorney’s
failure to serve stop notice on construction project lend-
ers and to file timely foreclosure action were ‘‘related
acts, errors or omissions’’ because both failures arose
from same transaction, collection of single debt, and
resulted in same injury, loss of debt); Paradigm Ins.
Co. v. P & C Ins. Systems, 747 So. 2d 1040, 1042–43
(Fla. App. 2000) (insurance agency’s negligent failure
to procure primary liability insurance for client and its
subsequent failure to notify excess insurance carrier of
client’s claim were ‘‘related acts’’ because they both
pertained to loss of coverage for same $2 million judg-
ment against client); Columbia Casualty Co. v. CP
National, Inc., supra, 175 S.W.3d 348 (physicians’ misin-
terpretation of X ray and failure to advise of need for
follow-up X ray comprised ‘‘related medical incidents’’
when both led to same outcome, patient’s death from
belatedly diagnosed lymphoma).9
Conversely, multiple acts of negligence by an insured
usually are held to be unrelated when, although con-
nected by some aspect, they have caused distinctly dif-
ferent damages. In some instances, acts are held to be
unrelated when they have caused different losses to
the same party. See, e.g., Federal Deposit Ins. Corp. v.
Mmahat, 907 F.2d 546, 553–54 (5th Cir. 1990) (attorney’s
repeated wrongful advice to bank to make loans in
excess of regulatory maximum was not ‘‘series of
related acts’’ because precise character of wrongful
advice varied and results were discrete losses on seven
different loans), cert. denied, 499 U.S. 936, 111 S. Ct.
1387, 113 L. Ed. 2d 444 (1991); Kopelowitz v. Home Ins.
Co., 977 F. Sup. 1179, 1188 (S.D. Fla. 1997) (attorney’s
failure to perfect client’s security interest and his subse-
quent mishandling of bankruptcy proceedings on cli-
ent’s behalf were not ‘‘related acts, errors or omissions’’
because resulting claims involved ‘‘distinct facts and
possible damages’’); Doe v. Illinois State Medical Inter-
Ins. Exchange, supra, 234 Ill. App. 3d 133–37 (physi-
cian’s multiple, distinct errors in course of treating
patient for diabetes were not ‘‘related acts or omissions’’
where patient developed pancreatitis, which also was
improperly treated, necessitating multiple surgeries on
multiple organs, during which patient contracted hepa-
titis and HIV from blood transfusions); Medical Mal-
practice Joint Underwriting Assn. of Rhode Island v.
Lyons, Docket No. PC 00-5583, 2004 WL 3190049, *6–7
(R.I. Super. December 17, 2004) (physician’s ongoing
treatment failures in respect to patient’s two separate
maladies were not ‘‘ ‘related acts or omissions’ ’’).10
In other cases, courts have concluded that acts are
unrelated when they cause different losses to different
parties.11 See, e.g., Argent Financial Group, Inc. v.
Fidelity & Deposit Co. of Maryland, Docket No. Civ.
A. 04-2323, 2005 WL 2304515, *9 (W.D. La. August 21,
2005) (five claims made against securities broker for
breach of fiduciary duty did not concern ‘‘related . . .
wrongful acts’’ when they involved different customers,
transactions and types of wrongdoing); Scott v. Ameri-
can National Fire Ins. Co., supra, 216 F. Sup. 2d 693–95
(attorney’s negligence in incorporating business,
assigning it property rights and performing due dili-
gence as to value of property rights were not ‘‘related
acts, errors and omissions’’ when he owed different
duties to three claimants, corporation and two of its
investors, each of whom suffered different and discrete
harms); National Union Ins. Co. of Pittsburgh, PA v.
Holmes & Graven, 23 F. Sup. 2d 1057, 1069–70 (D. Minn.
1998) (separate claims of housing authority and project
bond trustee against attorney pertaining to his negligent
preparation of documents in connection with housing
project financing did not arise out of ‘‘ ‘related acts,
errors or omissions’ ’’ because each claimant’s loss dif-
fered as to both type and amount); St. Paul Fire &
Marine Ins. Co. v. Chong, 787 F. Sup. 183, 188 (D. Kan.
1992) (attorney’s multiple errors in representing three
codefendants in criminal matter were not ‘‘ ‘series of
related wrongful acts’ ’’ when there were several dis-
crete omissions and actions by attorney which resulted
in different losses to each codefendant); Beale v. Ameri-
can National Lawyers Ins. Reciprocal, 379 Md. 643,
666–67, 843 A.2d 78 (2004) (attorney’s separate but simi-
lar errors in representing five children in lead paint
action were not ‘‘related . . . professional services’’
because he owed separate duties to each child and
caused distinct damages as to each child).12
To summarize, we conclude that the phrase related
medical incidents does not clearly and unambiguously
encompass incidents in which multiple losses are suf-
fered by multiple people, when each loss has been
caused by a unique set of negligent acts, errors or omis-
sions by the insured, even though there may be a com-
mon precipitating factor. Moreover, cases from other
jurisdictions construing similar policy language gener-
ally hold that when multiple losses are caused, to either
the same or multiple parties, the causative acts are
not related. Guided by those decisions and the rule
requiring any ambiguity in an insurance policy to be
construed in favor of affording greater coverage, we
conclude that the acts, errors or omissions underlying
the individual defendants’ claims against Lexington
Healthcare are not related medical incidents under the
terms of the policy. Accordingly, a separate per medical
incident coverage limit applies to each individual defen-
dant’s claim.
II
The plaintiff also claims that the trial court improp-
erly concluded that the policy provides a total of $10
million in professional liability coverage for all of the
individual defendants’ claims, rather than a total of only
$1 million. According to the plaintiff, the trial court
improperly interpreted a $10 million ‘‘[a]ggregate [p]ol-
icy [l]imit’’ provided by an endorsement to the policy
as superseding the $1 million ‘‘[a]ggregate [l]imit’’ for
professional liability coverage that is listed in the policy
declarations. Nationwide and the individual defendants
argue that the trial court properly interpreted the policy
as affording a total of $10 million in professional liability
coverage for all of the individual defendants’ claims.
We agree with the plaintiff that only $1 million of profes-
sional liability coverage is available for all of the individ-
ual defendants’ claims.
The following additional facts are relevant. On the
declarations page of the policy, under the heading of
‘‘LIMITS OF INSURANCE,’’ the following provisions
are included:
‘‘(a) Healthcare Professional Liability
‘‘Aggregate Limit $1,000,000
‘‘Each Medical Incident $500,000 . . .
‘‘(b) Healthcare General Liability
‘‘Aggregate Limit $1,000,000 . . .
‘‘Each Occurrence Limit $500,000 . . . .’’
As we previously noted, it is undisputed that only pro-
fessional liability coverage is available for the individual
defendants’ claims.
The policy includes separate coverage parts outlining
the terms of professional liability coverage and general
liability coverage, entitled, respectively, ‘‘Healthcare
Professional Liability Claims Made Coverage Part for
Long Term Care Facilities’’ and ‘‘Healthcare General
Liability Claims Made Coverage Part for Long Term
Care Facilities.’’ Section IV of the professional liability
part of the policy provides in relevant part:
‘‘IV. LIMITS OF INSURANCE
‘‘A. The Limits of Insurance shown in the Declarations
for Healthcare Professional Liability for Long Term
Care Facilities and the rules below fix the most we will
pay regardless of the number of:
‘‘1. Insureds;
‘‘2. Claims made or suits brought; or
‘‘3. Persons or organizations making claims or bring-
ing suits.
‘‘B. The Aggregate Limit is the most we will pay for
the sum of all damages under this Coverage Part.’’13
The policy also contains a number of endorsements,
including endorsement no. 3, which provides in rele-
vant part:14
‘‘II. AGGREGATE LIMITS PER LOCATION . . .
‘‘A. HEALTHCARE PROFESSIONAL LIABILITY COV-
ERAGE PART FOR LONG TERM CARE FACILITIES,
Section IV. Limits of Insurance, Item B. is deleted in
its entirety and replaced with the following:
‘‘The Aggregate Limit is the most we will pay for
the sum of all damages under this Coverage Part. The
Aggregate Limit shall apply separately to each location
owned or rented by you.’’ (Emphasis in original.)
Thus, part II A of endorsement no. 3 amends § IV of
the professional liability part of the policy, previously
recited, to add the following sentence to subsection B:
‘‘The Aggregate Limit shall apply separately to each
location owned or rented by you.’’15
Endorsement no. 3 also amends the definitions sec-
tion of the policy, which applies to both the general
and professional liability parts, to add the following
definition: ‘‘Location means premises involving the
same operations of the Named Insured using the same
or connecting lots, or premises involving the same oper-
ations of the Named Insured whose connection is inter-
rupted only by a street, roadway, waterway or right-of-
way of a railroad.’’ (Emphasis in original.)
Endorsement no. 3 provides further that ‘‘[t]he policy
is amended’’ with the following language: ‘‘The Aggre-
gate Policy Limit stated below is the most we will pay
for any annual period for the sum of all damages payable
under the HEALTHCARE PROFESSIONAL LIABILITY
COVERAGE PART FOR LONG TERM CARE FACILI-
TIES and the HEALTHCARE GENERAL LIABILITY
COVERAGE PART FOR LONG TERM CARE
FACILITIES.
‘‘AGGREGATE POLICY LIMIT: $10,000,000.’’
(Emphasis in original.)
At its conclusion, endorsement no. 3 provides that
‘‘[a]ll other terms, conditions and exclusions of the
[p]olicy remain unchanged.’’
Finally, another endorsement to the policy, endorse-
ment no. 2, which is captioned ‘‘Schedule of Locations
Endorsement,’’ provides that ‘‘[t]he Policy is amended
as follows: The insurance provided by [the] . . .
HEALTHCARE GENERAL LIABILITY COVERAGE
PART [and the] HEALTHCARE PROFESSIONAL LIA-
BILITY COVERAGE PART shall be limited to the follow-
ing location(s), unless otherwise provided for within
the Policy . . . .’’ Thereafter, seven Connecticut
addresses are listed, one of which is the address for
Greenwood.
After examining endorsement no. 3 of the policy, the
trial court concluded that the total amount of profes-
sional liability coverage available for the individual
defendants’ claims clearly and unambiguously was $10
million and not $1 million. In reaching its conclusion,
the court equated the term ‘‘[a]ggregate [l]imit’’ with
the term ‘‘[a]ggregate [p]olicy [l]imit,’’ thus reading § IV
B of the professional liability part of the policy, as
modified by endorsement no. 3, as providing $10 million
of professional liability coverage for each of the seven
insured locations. The court reasoned that aggregate
limit was undefined by the policy, and it attributed any
difference in the two terms to the use of shorthand or
a scrivener’s error. Furthermore, according to the trial
court, ‘‘the [$1 million] aggregate limit [for professional
liability coverage] found in the declarations is irrele-
vant,’’ because it had been altered by endorsement no. 3.
We agree with the trial court’s assessment of the
policy as clear and unambiguous, but disagree with its
conclusions. The trial court’s interpretation of the pol-
icy is incorrect for the following reasons. First, the
court improperly equated the different terms aggregate
limit and aggregate policy limit when no compelling
reason existed to do so. Typically, when different terms
are employed within the same writing, different mean-
ings are intended. Cf. Scholastic Book Clubs, Inc. v.
Commissioner of Revenue Services, 304 Conn. 204, 217,
38 A.3d 1183 (applying rule in statutory construction),
cert. denied, U.S. , 133 S. Ct. 425, 184 L. Ed. 2d 255
(2012). Using the ordinary meanings of its component
words,16 the phrase ‘‘[a]ggregate [p]olicy [l]imit,’’ which
appears only in endorsement no. 3, clearly conveys
that the amount specified, $10 million, is the maximum
amount of insurance available under the entire policy
when claims for both general liability and professional
liability coverage, at all insured locations, are com-
bined.17 Additionally, that endorsement explicitly pro-
vides that the ‘‘[a]ggregate [p]olicy [l]imit’’ is the most
the plaintiff will pay annually for the sum of all damages
under both the general liability and professional liability
parts of the policy.
In contrast, the term ‘‘[a]ggregate [l]imit’’ appears
both in the declarations page, directly beneath the head-
ing, ‘‘Healthcare Professional Liability,’’ and in § IV B
of the professional liability part of the policy, both prior
to and following its amendment by endorsement no. 3.
By virtue of its placement and the absence of the word
‘‘policy,’’ the term ‘‘[a]ggregate [l]imit’’ logically means
the total amount available for professional liability cov-
erage only, at a particular location.18
Next, in reading the policy as it did, the trial court
rendered the portion of the declarations page pertaining
to aggregate limits superfluous, referring to it as ‘‘irrele-
vant,’’ instead of attempting to read the declarations in
conjunction with endorsement no. 3 to see if each part
of the policy could be given effect. ‘‘A rider or endorse-
ment is a writing added or attached to a policy or certifi-
cate of insurance which expands or restricts its benefits
or excludes certain conditions from coverage. 2 L.
Russ & T. Segalla, Couch on Insurance (3d Ed. 2005)
§ 18:17, p. 18-24. When properly incorporated into the
policy, the policy and the rider or endorsement together
constitute the contract of insurance, and are to be read
together to determine the contract actually intended by
the parties. Id., p. 18-26.’’ (Internal quotation marks
omitted.) National Grange Mutual Ins. Co. v. Santani-
ello, 290 Conn. 81, 93, 961 A.2d 387 (2009). ‘‘[I]n constru-
ing an endorsement to an insurance policy, the
endorsement and policy must be read together, and the
policy remains in full force and effect except as altered
by the words of the endorsement.’’ (Internal quotation
marks omitted.) Liberty Mutual Ins. Co. v. Lone Star
Industries, Inc., 290 Conn. 767, 806, 967 A.2d 1 (2009).
By its plain terms, the portion of endorsement no. 3
providing for an aggregate policy limit for general and
professional liability coverage does not purport to alter
or supersede any specific, preexisting part of the policy,
but only to ‘‘amend’’ the policy as a whole. Conse-
quently, it is most reasonably read as an addition to the
policy, made necessary by the simultaneous addition
of endorsement no. 2, which extends the general and
professional liability coverage afforded by the policy to
seven different insured locations. In contrast, a different
portion of endorsement no. 3 provides clearly that § IV
B of the professional liability portion of the policy is
‘‘deleted’’ and ‘‘replaced’’ with the substitute language
that was then set forth.19 That substitute language makes
clear that the $1 million aggregate limit for professional
liability coverage stated in the declarations remains in
effect, but applies ‘‘separately to each location . . . .’’
Endorsement no. 3 concludes by verifying that ‘‘[a]ll
other terms, conditions and exclusions of the [p]olicy
remain unchanged.’’ In short, nothing in endorsement
no. 3 suggests that the aggregate limits shown in the
declarations have been altered, or rendered irrelevant,
other than to make clear that they apply separately to
each location. Accordingly, the $1 million aggregate
limit for professional liability coverage remains in
effect, but applies separately to each insured location.
‘‘To the extent that an interpretation makes another
term or provision meaningless, that interpretation
should be rejected in favor of an interpretation that
preserves meaning.’’ 1 J. Thomas & F. Mootz, New
Appleman on Insurance Law (Library Ed. 2011) § 5.03
[1], p. 5-31. ‘‘We previously have recognized the canon
of construction of insurance policies that a policy
should not be interpreted so as to render any part of
it superfluous. . . . [W]e have consistently stated that
[i]f it is reasonably possible to do so, every provision
of an insurance policy must be given operative effect
. . . because parties ordinarily do not insert meaning-
less provisions in their agreements. . . . Since it must
be assumed that each word contained in an insurance
policy is intended to serve a purpose, every term will
be given effect if that can be done by any reasonable
construction . . . . A construction of an insurance pol-
icy which entirely neutralizes one provision should not
be adopted if the contract is susceptible of another
construction which gives effect to all of its provisions
and is consistent with the general intent.’’ (Internal quo-
tation marks omitted.) R.T. Vanderbilt Co. v. Continen-
tal Casualty Co., 273 Conn. 448, 468–69, 870 A.2d
1048 (2005).
Reading all of the policy’s provisions together, we
can discern a construction that gives effect to all of
those provisions and renders none of them superfluous.
The policy, without consideration of the endorsements,
provides for a total of $1 million in general liability
coverage and a total of $1 million in professional liability
coverage for a single location. These coverage limits
are stated clearly on the declarations page under the
heading of ‘‘Limits of Insurance,’’ where an ‘‘Aggregate
Limit’’ of $1 million is listed for each type of coverage.
Section IV of each coverage part, prior to any amend-
ment, reinforces those limits, providing that ‘‘[t]he Lim-
its of Insurance shown in the Declarations . . . fix the
most we will pay,’’ and, for each type of coverage, that
‘‘[t]he Aggregate Limit is the most we will pay for the
sum of all damages under this Coverage Part.’’
The policy then is amended by endorsements so as
to cover additional locations owned or rented by the
insured. Endorsement no. 2 lists seven different loca-
tions and provides that the policy shall apply to them.
Endorsement no. 3 defines ‘‘location,’’ in part, as contig-
uous premises involving the same operation, and also
changes § IV of each coverage part by adding: ‘‘The
Aggregate Limit shall apply separately to each location
owned or rented by you.’’ Once this language is added,
the policy provides for $1 million in general liability
coverage for each of the seven insured locations, and
$1 million in professional liability coverage for each of
the seven insured locations.
If we were to read no further, the foregoing provisions
would extend a total of $14 million in coverage to Lex-
ington Healthcare, $1 million of each type of coverage
for each of the seven locations. Endorsement no. 3
provides further, however, for a $10 million ‘‘[a]ggregate
[p]olicy [l]imit,’’ defined as ‘‘the most [the plaintiff] will
pay for any annual period for the sum of all damages
payable under the [professional liability and general
liability portions of the policy].’’ We agree with the
plaintiff that, read in the context of the policy as a
whole, the aggregate policy limit provision caps total
annual coverage under the policy, for all locations and
both types of coverage, at $10 million when, without
that provision, the maximum coverage would have been
$14 million. Properly construed, the aggregate policy
limit amends the policy to reduce the total combined
coverage to an amount that is less than what it other-
wise would have been.
‘‘A firm foundational rule in the construction of insur-
ance contracts is that the expressed intent of the parties
is to be ascertained by examining the contract or policy
as a whole.’’ 2 S. Plitt et al., Couch on Insurance (3d
Ed. Rev. 2010) § 21:19, p. 21-76. ‘‘[T]he policy must be
construed in its entirety, with each clause interpreted
in relation to others contained therein. All its words,
parts, and provisions must be construed together as
one entire contract, each part interpreted in the light
of all the other parts in connection with the risk or
subject matter.’’ Id., pp. 21-77 through 21-82.
By equating distinct terms and reading endorsement
no. 3 in isolation, rather than in conjunction with other
parts of the policy, the trial court improperly rendered
the aggregate limits provided by the declarations super-
fluous and improperly concluded that a total of $10
million in professional liability coverage was available
for all of the individual defendants’ claims. We con-
clude, to the contrary, that the policy provides for only
$1 million in professional liability coverage for those
claims, because that is the aggregate limit for that cover-
age part at a single insured location.20
III
We now turn to the individual defendants’ cross
appeal. The individual defendants claim that the trial
court improperly interpreted an endorsement to the
policy providing for a self-insured retention. According
to the individual defendants, the court improperly
applied the terms of the endorsement to conclude that
the plaintiff’s liability for a particular medical incident
commences only when the damages caused by that
medical incident exceed $250,000. In the alternative, the
individual defendants contend that the court improperly
held that the plaintiff’s liability is limited to $250,000
per medical incident. We disagree with the individual
defendants’ first claim, but agree with their second
claim.
The following additional facts and procedural history
are relevant. As we stated previously, the limits of insur-
ance are provided on the declarations page of the policy.
Under the subheading of ‘‘Healthcare Professional Lia-
bility,’’ the following appears:
‘‘Aggregate Limit $1,000,000
‘‘Each Medical Incident $500,000
‘‘Deductible SEE ENDORSEMENT #5
‘‘Deductible Aggregate SEE ENDORSEMENT #5’’
In § IV of the healthcare professional liability part of
the policy, the following language is provided:
‘‘A. The Limits of Insurance shown in the Declarations
for Healthcare Professional Liability for Long Term
Care Facilities . . . fix the most we will pay regardless
of the number of:
‘‘1. Insureds;
‘‘2. Claims made or suits brought; or
‘‘3. Persons or organizations making claims or bring-
ing suits. . . .’’ (Emphasis added.)
Endorsement no. 5 of the policy is captioned ‘‘SELF
INSURED RETENTION ENDORSEMENT (Expenses
within the Self Insured Retention)’’ and provides in
relevant part21 as follows:
‘‘It is agreed that . . . Section V, DEDUCTIBLE, in
the HEALTHCARE PROFESSIONAL LIABILITY COV-
ERAGE PART FOR LONG TERM CARE FACILITIES [is]
. . . deleted in [its] entirety and . . . replaced with the
following:
‘‘A. The First Named Insured [defined elsewhere in
the policy as Lexington Healthcare] shall be responsible
for the Self Insured Retention amounts shown below.
Expenses incurred by the First Named Insured in
investigating and defending claims and suits are
included within the Self Insured Retentions. The Self
Insured Retention applies separately to each medical
incident . . . to which this policy applies, and the First
Named Insured shall not insure against it without our
written consent. . . .
‘‘2. All claims arising from a single medical incident
or continuous, related or repeated medical incidents
shall be subject to one Self Insured Retention. The Self
Insured Retention Medical Incident Aggregate stated
below is the total amount of damages arising out of all
Self Insured Retentions for all medical incidents during
the policy period.
‘‘B. We will pay damages only in excess of the Self
Insured Retentions stated below. We will not be respon-
sible for payment of amounts within the Self Insured
Retentions, which the First Named Insured will be obli-
gated to pay.
‘‘C. Our rights and duties with respect to the defense
and settlement of claims applies only when [a] . . .
medical incident is excess of the Self Insured Retention
stated below and only for that portion of the loss which
is excess of the Self Insured Retention.
‘‘D. The Limits of Liability as stated in this policy will
be reduced by the payment of damages and expenses
paid within the Self Insured Retentions.
‘‘E. The First Named Insured shall at all times main-
tain a claims handling service approved by us to handle
claims within the Self Insured Retentions.
‘‘F. The First Named Insured shall immediately notify
us in writing of any claims to which this policy
applies which
‘‘1. an Insured has received notice of a suit in which
the damage demand exceeds the amount of the Self
Insured Retention, or
‘‘2. may exceed 50% of the Self Insured Retention
. . . .
‘‘Schedule of Self Insured Retentions . . . .
‘‘Self Insured Retention per Medical Incident:
$250,000
‘‘Self Insured Retention Medical Incident Aggregate:
Not Applicable
‘‘All other terms, conditions and exclusions of the
policy remain unchanged.’’
The trial court interpreted endorsement no. 5 as
requiring the plaintiff to provide coverage to Lexington
Healthcare for each medical incident only to the extent
that damages for that incident exceeded $250,000, the
amount of the self-insured retention. According to the
court, even though Lexington Healthcare is insolvent;
see footnote 4 of this opinion; and, therefore, unable to
pay the self-insured retention amount itself, the policy
clearly provides that the plaintiff is not responsible for
the first $250,000 of damages for each medical incident.
The trial court concluded further that endorsement no.
5 operates to reduce the maximum amount payable by
the plaintiff for any one medical incident from $500,000,
as stated in the declarations, to $250,000.22
The individual defendants claim that both of the trial
court’s conclusions regarding endorsement no. 5 are
improper. They argue that, because Lexington Health-
care has not paid the $250,000 self-insured retention
for each medical incident due to its insolvency, the
insurance provided by the plaintiff should ‘‘drop down,’’
thereby triggering coverage beginning with the first dol-
lar of each individual defendant’s claim, rather than
after the $250,000 threshold has been reached. The indi-
vidual defendants claim alternatively that, even if the
trial court correctly held that coverage begins only once
a particular claim exceeds $250,000, it improperly held
that the maximum amount available for each claim is
$250,000, rather than the $500,000 per medical incident
provided for in the policy declarations. We disagree
with the individual defendants’ first contention, but
agree with the second one.
To begin, paragraphs A and B of endorsement no. 5
make it abundantly clear that Lexington Healthcare,
and not the plaintiff, must pay the first $250,000 of
damages attributable to any one medical incident,
including investigation and defense expenses. Specifi-
cally, paragraph A provides that Lexington Healthcare
‘‘shall be responsible for the Self Insured Retention
[amount] shown below,’’ specified as $250,000 per medi-
cal incident, and paragraph B provides that the plaintiff
‘‘will pay damages only in excess of the Self Insured
Retentions stated below . . . [and] will not be respon-
sible for payment of amounts within the Self Insured
Retentions, which [Lexington Healthcare] will be obli-
gated to pay.’’ The plaintiff’s lack of responsibility for
damages within the self-insured retention is reinforced
further by paragraph C of endorsement no. 5, which
provides that its duty to defend and settle claims applies
only when a ‘‘medical incident is excess of the Self
Insured Retention stated below and only for that portion
of the loss which is excess of the Self Insured Reten-
tion,’’ and paragraph F of the endorsement, which indi-
cates that Lexington Healthcare need not even notify
the plaintiff of a claim unless it is possible that it will
exceed the amount of the self-insured retention.
Because all of the foregoing obligations are stated in
clear, unqualified language, we decline to impute an
exception to which the parties did not explicitly or
impliedly agree, namely, that the plaintiff’s coverage
would ‘‘drop down’’ within the self-insured retention
in the event Lexington Healthcare could not fulfill its
obligations under paragraphs A and B of endorsement
no. 5.23 Consequently, we conclude that the trial court
correctly held that the plaintiff is not liable for the first
$250,000 of each individual defendant’s claim.
Although we agree with the trial court that the plain-
tiff’s coverage does not ‘‘drop down’’ due to the unsatis-
fied self-insured retention, we disagree with the court’s
conclusion that, once the plaintiff’s duty to indemnify is
triggered by the amount of a particular claim exceeding
$250,000, its liability for that claim is limited to only
the next $250,000 of damages, and not the $500,000 per
medical incident provided in the declarations, which,
pursuant to § IV A of the policy, is ‘‘the most [the plain-
tiff] will pay . . . .’’24 Although it did not specifically
so state; see footnote 22 of this opinion; the court pre-
sumably made this determination in reliance on para-
graph D of endorsement no. 5, which provides that
‘‘[t]he Limits of Liability as stated in this policy will be
reduced by the payment of damages and expenses paid
within the Self Insured Retention.’’ The plaintiff argues
that this provision unambiguously reduces the $500,000
per medical incident limit stated in the policy endorse-
ments by $250,000, the amount of each claim that is
within the self-insured retention. The individual defen-
dants contend that the provision is unclear and, there-
fore, should be construed in favor of affording more
coverage. We agree with the individual defendants.
Specifically, paragraph D of endorsement no. 5 does
not provide, as it easily could have, that the plaintiff’s
limits of liability are reduced ‘‘to $250,000 per medical
incident,’’ ‘‘by the amount of claims made within the
Self Insured Retention’’ or by ‘‘the amount of the Self
Insured Retention.’’ Rather, that paragraph provides
that those limits will be reduced ‘‘by the payment of
damages and expenses paid within the Self Insured
Retentions.’’ (Emphasis added.) Reading the endorse-
ment literally, the triggering factor for a reduction in
liability limits is the insured’s actual fulfillment of its
obligation to pay the self-insured retention. Addition-
ally, the paragraph gives no indication as to what should
occur in the event the insured cannot fulfill that obliga-
tion due to its insolvency. Because paragraph D is, at
the very least, ambiguous, it must be construed in favor
of the insured, so as not to reduce the coverage limits
clearly provided in the policy declarations.25 See John-
son v. Connecticut Ins. Guaranty Assn., supra, 302
Conn. 643. Accordingly, we conclude that the trial court
improperly held that, pursuant to endorsement no. 5,
the limit of the plaintiff’s liability for each medical inci-
dent is reduced to $250,000.
In sum, the trial court properly construed endorse-
ment no. 5 to conclude that the plaintiff’s liability for
each medical incident begins only after damages for
that incident exceed $250,000. The court improperly
concluded, however, that the plaintiff’s liability there-
after is limited to $250,000 per medical incident, rather
than the $500,000 provided in the policy declarations.
Instead, because the $500,000 per medical incident limi-
tation provided in the declarations has not clearly been
altered by endorsement no. 5 in the circumstances of
this case, the plaintiff remains potentially liable for the
next $500,000 in damages for each medical incident.
The judgment with respect to the April 13, 2009 deci-
sion is reversed in part in SC 18681 and the case is
remanded with direction to render partial summary
judgment in favor of the individual defendants and
Nationwide in accordance with this opinion; the plain-
tiff’s cross appeal in SC 18682 is dismissed.
In this opinion NORCOTT, PALMER and ZARELLA,
Js., concurred.
* This case originally was decided on June 18, 2013, by a five member
panel of this court consisting of Chief Justice Rogers and Justices Norcott,
Palmer, Zarella and Eveleigh. See Lexington Ins. Co. v. Lexington Health-
care Group, Inc., 309 Conn. 1, 68 A.3d 1121 (2013). We subsequently granted
the motion for reconsideration en banc filed by the defendant Nestor Rodri-
guez, conservator of the person of Jose Rodriguez, et al. Accordingly, Justices
McDonald and Espinosa were added to the panel, and they have read the
record and briefs and listened to a recording of oral argument prior to
participating in this decision. On reconsideration en banc, Justice Norcott
has reconsidered his original vote and joins Justices Palmer and Zarella in
concurring with the Chief Justice’s majority opinion, and Justices McDonald
and Espinosa join in Justice Eveleigh’s concurring and dissenting opinion.
Because of these changes in the panel and vote, this opinion supersedes
our prior decision in all respects. See Honulik v. Greenwich, 293 Conn. 698,
702 n.1, 980 A.2d 880 (2009).
1
Nationwide is a real estate investment trust.
2
Despite the similarities in their names, Lexington Healthcare and High-
green have no corporate affiliation with the plaintiff.
3
The individual defendants are: Galina Kholod, administratrix of the estate
of Sofiya Ruditser; Stephen P. Andrusko, administrator of the estate of
Shirley Bergeron; Marion J. Boynton and Gladys M. Dodd, coadministratrices
of the estate of Elizabeth M. Arata; Ricardo Pereira, administrator of the
estate of Hermenegildo Pereira; Rosa Maria Elias, administratrix of the
estate of Amalia Elias; Evelyn Castro, administratrix of the estate of Gerarda
Muriel; Dale Timmons, administrator of the estate of Samuel Barnes; Emily
Piehl, administratrix of the estate of Elizabeth K. Nadeau; William Morin,
administrator of the estate of Lois May Morin; Carmen Munoz, administratrix
of the estate of Flor Munoz; Nestor Rodriguez, conservator of the person
of Jose Rodriguez; Gladys Lopez, conservator of the person of Gladys Perez;
William Rodriguez, administrator of the estate of Juan Rodriguez; and Juan
Santiago, administrator of the estate of Justo Santiago.
4
Prior to the filing of this action, both Lexington Healthcare and Highgreen
filed for bankruptcy. The Bankruptcy Court lifted the automatic bankruptcy
stay to permit the plaintiff to file the declaratory judgment action. Lexington
Healthcare and Highgreen subsequently were defaulted for their failure to
appear and are not participants in this appeal.
The plaintiff also named as defendants Alfred T. Giuliano, the bankruptcy
trustee, Spectrum Healthcare, LLC, and Brookview Corporation. The action
against Spectrum Healthcare, LLC, and Brookview Corporation subsequently
was withdrawn.
5
The defendants who cross appealed are Marion J. Boynton, Gladys M.
Dodd, Ricardo Pereira and Rosa Maria Elias in their administrative capaci-
ties. See footnote 3 of this opinion.
6
The appeals and the cross appeals in this case originally were brought
to the Appellate Court, and we transferred them to this court pursuant to
General Statutes § 51-199 (c) and Practice Book § 65-1.
The trial court decided the issues presently on appeal in a memorandum
of decision dated April 13, 2009. That decision disposed of all claims and
counterclaims relating to Lexington Healthcare, Highgreen and the individ-
ual defendants, thereby rendering the trial court’s judgment final as to those
parties. See Practice Book § 61-3. The plaintiff’s appeal, Docket No. SC
18681, and the individual defendants’ cross appeal followed.
In the underlying negligence actions brought by the individual defendants,
Nationwide had filed cross claims against Lexington Healthcare and High-
green claiming both common-law and contractual indemnity and breach of
contract for Lexington Healthcare’s alleged failure to procure proper liability
insurance pursuant to its lease with Nationwide. In the present declaratory
judgment action, a subset of the plaintiff’s complaint and Nationwide’s
counterclaims were directed at the question of insurance coverage for the
indemnity and breach of contract claims.
In a second memorandum of decision dated January 26, 2010, the trial
court disposed, for the most part, of these remaining claims and counter-
claims involving potential coverage for Nationwide. The court concluded
that no coverage was available for Nationwide’s breach of contract or con-
tractual indemnity cross claims, but that coverage potentially was available
for Nationwide’s common-law indemnity cross claim. It further concluded,
however, that there existed a genuine issue of material fact as to whether
Nationwide’s claim for coverage for its common-law indemnity cross claim
was timely filed. Nationwide thereafter filed an appeal, Docket No. SC 18682,
from the trial court’s April 13, 2009 and January 26, 2010 decisions, and the
plaintiff filed a cross appeal. Nationwide subsequently withdrew its appeal.
The plaintiff, however, did not withdraw its cross appeal. On December 13,
2010, this court granted the plaintiff’s motion to consolidate the appeal and
cross appeal in Docket No. SC 18681 with the cross appeal in Docket No.
SC 18682. Prior to oral argument, we directed the parties to be prepared
to address the question of whether jurisdiction exists for the cross appeal
in Docket No. SC 18682 due to the lack of a final judgment. Notably, that
cross appeal does not raise any new issues beyond those raised by the
plaintiff in its direct appeal in Docket No. SC 18681. According to the plaintiff,
it has maintained the cross appeal solely so that our decision in Docket No.
SC 18681 will be binding on Nationwide as well as on the individual
defendants.
In an unopposed supplemental filing, the plaintiff argues that, because
the trial court already has determined the total amount of coverage for
which it is liable under the policy, further proceedings cannot affect it, and
the issue of whether it must indemnify Nationwide for its common-law
indemnity claim is, from the plaintiff’s perspective, moot. See State v. Curcio,
191 Conn. 27, 31, 463 A.2d 566 (1983) (otherwise interlocutory order is final
for purposes of appeal where it ‘‘so concludes the rights of the parties
that further proceedings cannot affect them’’). It may be true that further
proceedings may not affect the plaintiff in any meaningful way, but this is
not the case for Nationwide. Although the total amount of coverage was
determined in the trial court’s April 13, 2009 judgment, the question of
whether Nationwide may share in that coverage, to any extent, remains open.
Accordingly, the judgment, as to Nationwide, is not final, and, therefore, the
plaintiff’s cross appeal in Docket No. SC 18682 must be dismissed for lack
of subject matter jurisdiction. Nevertheless, this court’s interpretation of
the policy at issue will be binding, under general precedential principles,
in any further trial court proceedings concerning the present coverage dis-
pute. See Kelly v. New Haven, 275 Conn. 580, 600 n.21, 881 A.2d 978 (2005)
(although final judgment existed in only one of three related cases on appeal,
this court’s interpretation of city charter necessarily bound trial courts in
other two cases raising same issue).
7
The trial court rejected the plaintiff’s argument that the ‘‘event test,’’
used by some courts to identify what is an ‘‘occurrence’’ for purposes of a
general liability policy, similarly should apply to determine, in the context
of a professional liability policy, whether ‘‘medical incidents’’ are related.
The court reasoned that the different types of policies served different
purposes such that the test from one was not transferrable to the other.
We agree that decisions construing the term ‘‘occurrence’’ as used in general
liability insurance policies; see, e.g., Metropolitan Life Ins. Co. v. Aetna
Casualty & Surety Co., 255 Conn. 295, 765 A.2d 891 (2001); are of limited
applicability to the present matter, primarily due to differing policy language.
Accordingly, we do not rely upon such cases herein.
8
‘‘To ascertain the commonly approved usage of a word [in an insurance
policy], it is appropriate to look to the dictionary definition of the term.’’
(Internal quotation marks omitted.) Buell Industries, Inc. v. Greater New
York Mutual Ins. Co., 259 Conn. 527, 539, 791 A.2d 489 (2002); see also 2
S. Plitt et al., Couch on Insurance (3d Ed. Rev. 2010) § 22:38, p. 22-164 (‘‘[t]he
rule that words in insurance policies are to be construed using their ordinary
and popular meanings has long been recognized, and has been applied in
the context of various types of insurance’’).
9
But see Arizona Property & Casualty Ins. Guaranty Fund v. Helme,
153 Ariz. 129, 133–36, 735 P.2d 451 (1987) (physicians’ separate failure to
examine patient’s X rays or react to his worsening condition not ‘‘series of
related omissions,’’ although both led to same result, patient’s paralysis
and death).
10
But see North American Specialty Ins. Co. v. Royal Surplus Lines Ins.
Co., 541 F.3d 552, 558, 560 (5th Cir. 2008) (nursing home’s sustained poor
treatment of resident, causing him multiple injuries and indignities,
amounted to ‘‘related medical incidents’’ when claimant’s theory of case
was continuing pattern and practice of neglect, not series of discrete
wrongs); URS Corp. v. Travelers Indemnity Co., 501 F. Sup. 2d 968, 977
(E.D. Mich. 2007) (engineers’ various failures relating to design of two
different schools for same school system, causing damages to each school,
held to be ‘‘series of related acts’’ when schools were to be designed ‘‘in a
practically identical fashion’’).
11
We agree with the plaintiff that Harris Methodist Health System v.
Employers Reinsurance Corp., Docket No. 3:96-CV-0054-R, 1997 WL 446459
(N.D. Tex. July 25, 1997), on which the trial court relied in holding that the
present case did not involve related medical incidents, is inapposite because
the policy language at issue in Harris Methodist Health System differed
from the policy language at issue here. Specifically, the relevant provision
in Harris Methodist Health System provided: ‘‘Any . . . act or omission
together with all related acts or omissions in the furnishing of services to
any one person shall be considered one medical incident.’’ (Emphasis
added; internal quotation marks omitted.) Id., *7. Accordingly, it was clear
in that case that a hospital employee’s actions that injured several different
patients did not together comprise a single medical incident. See id., *21–22.
Nevertheless, there is ample authority, cited hereinafter, that even in the
absence of explicit policy language limiting related incidents to those involv-
ing the same patient, separate negligent acts of an insured that result in
discrete losses to different parties are not ‘‘related’’ as contemplated by a
coverage limitation clause.
12
In limited instances, courts have held acts, omissions or incidents to
be related even when they have caused multiple harms to multiple parties.
These cases, however, differ from the norm. In one case, the policy at issue
defined the relevant provision in a fashion that created a very broad scope.
See Gateway Group Advantage, Inc. v. McCarthy, 300 F. Sup. 2d 236, 240,
243–44 (D. Mass. 2003) (The court held that the franchisor had engaged
´
in ‘‘ ‘related wrongful acts’ ’’ vis-a-vis different franchisees, causing each
franchisee to sustain losses, when the policy provided that ‘‘ ‘Related Wrong-
ful Acts’ ’’ were ‘‘Wrongful Acts which are the same, related or continuous,
or Wrongful Acts which arise from a common nucleus of facts. Claims can
allege Related Wrongful Acts regardless of whether such Claims involve the
same or different claimants, Insureds or legal causes of action.’’ [Emphasis
added.]). In three other cases, courts aggregated claims underlying class
actions with cross claims by the class action defendant against its counsel
for providing negligent advice or services in connection with the activities
giving rise to the class members’ claims. See generally Continental Casualty
Co. v. Wendt, 205 F.3d 1258 (11th Cir. 2000); Gregory v. Home Ins. Co.,
supra, 876 F.2d 602; Westport Ins. Corp. v. Coffman, Docket No. C2-05-
1152, 2009 WL 243096 (S.D. Ohio January 29, 2009). We conclude that these
decisions are readily distinguishable from the typical multiple loss cases
cited herein because the class members’ claims against the clients and the
clients’ malpractice claims against their attorneys clearly are inextricably
intertwined, with the losses caused to the attorneys by their clients’ malprac-
tice claims being, in essence, derivative of the losses caused to the clients
from the class members’ claims. Accordingly, in those cases, the acts at
issue fit comfortably and unambiguously within the commonly accepted
definition of the term related.
13
Section IV of the general liability part of the policy reads similarly to
§ IV of the professional liability part of the policy, but limits the coverage
afforded by the general liability provisions:
‘‘IV. LIMITS OF INSURANCE
‘‘A. The Limits of Insurance shown in the Declarations for Healthcare
General Liability for Long Term Care Facilities and the rules below fix the
most we will pay regardless of the number of:
‘‘1. Insureds;
‘‘2. Claims submitted or suits brought; or
‘‘3. Persons or organizations making claims or bringing suits.
‘‘B. The Aggregate Limit is the most we will pay for the sum of:
‘‘1. Damages under Insuring Agreement A. Bodily Injury and Property
Damage, except damages because of bodily injury or property damage
included in the products-completed operations hazard;
‘‘2. Damages under Insuring Agreement B. Personal and Advertising
Injury; and
‘‘3. Medical expenses under Insuring Agreement C.’’
Agreements A through C are subparts of the general liability part of
the policy.
14
The complete substantive language of endorsement no. 3 provides as
follows:
‘‘AGGREGATE LIMITS ENDORSEMENT [GENERAL LIABILITY/PRO-
FESSIONAL LIABILITY]
‘‘The Policy is amended as follows:
‘‘I. AGGREGATE POLICY LIMIT
‘‘The Aggregate Policy Limit stated below is the most we will pay for any
annual period for the sum of all damages payable under the HEALTHCARE
PROFESSIONAL LIABILITY COVERAGE PART FOR LONG TERM CARE
FACILITIES and the HEALTHCARE GENERAL LIABILITY COVERAGE
PART FOR LONG TERM CARE FACILITIES.
‘‘AGGREGATE POLICY LIMIT: $10,000,000
‘‘II. AGGREGATE LIMITS PER LOCATION
‘‘Subject to the Aggregate Policy Limit stated in Item I. above:
‘‘A. HEALTHCARE PROFESSIONAL LIABILITY COVERAGE PART FOR
LONG TERM CARE FACILITIES, Section IV. Limits of Insurance, Item B.
is deleted in its entirety and replaced with the following:
‘‘The Aggregate Limit is the most we will pay for the sum of all damages
under this Coverage Part. The Aggregate Limit shall apply separately to
each location owned or rented by you.
‘‘B. HEALTHCARE GENERAL LIABILITY COVERAGE PART FOR LONG
TERM CARE FACILITIES, Section IV. Limits of Insurance, Item B. is deleted
in its entirety and replaced with the following:
‘‘The Aggregate Limit is the most we will pay for the sum of:
‘‘1. Damages under Insuring Agreement A. Bodily Injury and Property
Damage, except damages because of bodily injury or property damage
included in the products-completed operations hazard;
‘‘2. Damages under Insuring Agreement B. Personal and Advertising
Injury; and
‘‘3. Medical expenses under Insuring Agreement C.
‘‘The Aggregate Limit shall apply separately to each location owned or
rented by you.
‘‘III. DEFINITIONS
‘‘GENERAL POLICY PROVISIONS AND CONDITIONS, Section 1. Defini-
tions Applicable to All Coverage Parts is amended to include the following
additional definition:
‘‘Location means premises involving the same operations of the Named
Insured using the same or connecting lots, or premises involving the same
operations of the Named Insured whose connection is interrupted only by
a street, roadway, waterway or right-of-way of a railroad.
‘‘All other terms, conditions and exclusions of the Policy remain
unchanged.’’ (Emphasis in original.)
15
In similar fashion, part II B of endorsement no. 3 adds the same language
to § IV B of the general liability part of the policy, which concerns the
limits of insurance for general liability coverage. See footnotes 13 and 14
of this opinion.
16
See footnote 8 of this opinion.
17
See Random House Dictionary (2012) (defining ‘‘aggregate’’ as ‘‘formed
by the conjunction or collection of particulars into a whole mass or sum;
total; combined’’); id. (defining ‘‘limit’’ as ‘‘the final, utmost or furthest
boundary or point as to extent, amount, continuance, procedure, etc.’’).
18
The term ‘‘[a]ggregate [l]imit’’ also appears under the heading ‘‘Health-
care General Liability’’ on the declarations page and in § IV B of the general
liability part of the policy; see footnotes 13 and 14 of this opinion; thus
reinforcing the point that the term refers to the total amount available for
a particular coverage type at a particular location, and not from the policy
as a whole.
19
Similarly, another portion of endorsement no. 3 provides clearly that
§ IV B of the general liability portion of the policy is ‘‘deleted’’ and ‘‘replaced’’
with analogous language that was then set forth. See footnote 14 of this
opinion.
20
For the reasons we have explained, we believe that the policy language
unambiguously provides for this result. Even if we were to find the policy
ambiguous and, therefore, to examine the uncontested extrinsic evidence
submitted to the trial court; see Metropolitan Life Ins. Co. v. Aetna Casu-
alty & Surety Co., 255 Conn. 295, 306, 765 A.2d 891 (2001); we would reach
the same conclusion. That evidence consists of application materials from
the seven insured locations that are listed in endorsement no. 2, binders
for the policy at issue and one with greater coverage limits for which
Lexington Healthcare initially had applied, and a series of e-mails between
agents indicating that Lexington Healthcare could not afford the initially
sought coverage and needed a new quote for the same policy with lower
levels of coverage. Each binder provided to Lexington Healthcare lists, on
the same page, a ‘‘Policy Aggregate [Professional Liability/General Liability]’’
of $10 million directly below separately enumerated ‘‘[a]ggregate [l]imit[s]’’
for professional and general liability coverage (each set at $3 million for
the policy first sought, and $1 million for the policy ultimately issued). In
light of the previously issued binders, which clearly distinguished between
the coverage limits for each type of insurance and that for the policy overall,
Lexington Healthcare could not reasonably have confused and equated the
distinct terms ‘‘[a]ggregate [l]imit’’ and ‘‘[a]ggregate [p]olicy [l]imit’’ as did
the trial court. Additionally, because Lexington Healthcare, in response to
the first binder listing the ‘‘Policy Aggregate [Professional Liability/General
Liability]’’ as $10 million, sought lesser coverage due to an inability to pay
the quoted premium, an interpretation that would provide for $140 million
in total coverage for the revised policy, which commanded a lower premium,
is similarly unreasonable.
21
For clarity, as in part II of this opinion, we have deleted parallel language
of the endorsement pertaining to the general liability part of the policy.
22
The trial court explained: ‘‘The maximum policy coverage for each
medical incident is $500,000. Depending on the outcome of the [individual
defendants’] claims, [the plaintiff] would only be obligated to make a pay-
ment in excess of the self-insured retention of $250,000 up to the policy
limit of $500,000 for each medical incident subject to the aggregate limit
of $10 million. In other words, [the plaintiff] would be obligated to pay
each claimant any damages over $250,000 up to $500,000 (or a maximum
of $250,000 multiplied by up to thirteen medical incidents for the [individual
defendants] for a total of $3,250,000).’’ (Emphasis added.) As we previously
have concluded, the trial court improperly held that the policy’s aggregate
limit was $10 million, and not $1 million. Accordingly, even if trial court’s
subsidiary calculations were correct, the maximum amount payable under
the policy would be capped at $1 million.
23
The lack of an intent that coverage ‘‘drop down’’ in the event of Lexington
Healthcare’s bankruptcy is entirely consistent with the nature of the endorse-
ment as a self-insured retention rather than a deductible. ‘‘A ‘self-insured
retention’ . . . is an insurance arrangement whereby the insured takes all
responsibility for dealing with claims up to a certain amount of loss. This
includes adjusting the claim, either itself as the insurer or through a third-
party claims administrator, defending itself against the claim, and, if neces-
sary, paying it. Thus, as the term would suggest, the insured effectively self-
insures up to the limit of the risk it has chosen to retain.’’ 3 J. Thomas &
F. Mootz, supra, § 16.09 [3] [b], p. 16-209.
‘‘A self-insured retention differs from a deductible in several important
respects. Where the insured has purchased coverage subject to [a self-
insured retention], the insurer’s full policy limits will be available to respond
to a loss after the [self-insured retention] has been satisfied. . . . By con-
trast, the amount of a deductible is subtracted from the policy limits, thereby
reducing the amount of available insurance. . . .
‘‘The distinction is apparent when the policyholder is unable to pay the
deductible due to insolvency. In such a case, the insurer is liable to pay
covered losses up to its full policy limit and must seek reimbursement of
the deductible amount from the insolvent insured.’’ (Citations omitted.) 2
B. Ostrager & T. Newman, Handbook on Insurance Coverage Disputes (15th
Ed. 2011) § 13.13 [a], p. 1177; see also 3 J. Thomas & F. Mootz, supra,
§ 16.09 [3] [b], p. 16-210 (‘‘insurer in a deductible arrangement is primarily
responsible for the loss starting from its first dollar, though entitled to
reimbursement from the insured, so that in case of insured insolvency . . .
the insurer must pay amounts covered under the policy within the deductible
for which the insured is held liable’’).
With a self-insured retention, however, ‘‘the insured is liable to pay the
amount of its retained limit directly to the claimant. The insurer is not
obligated to pay the amount that the insolvent policyholder retained, so the
insurer is not required to ‘drop down’ and assume the insolvent insured’s
liability.’’ (Emphasis added.) 2 B. Ostrager & T. Newman, supra, § 13.13
[a], p. 1177; see, e.g., In re Keck, Mahin & Cate, 241 B.R. 583, 596 (Bankr.
N.D. Ill. 1999) (insurer not liable for any portion of bankrupt insured’s self-
insured retention); Home Ins. Co. of Illinois v. Hooper, 294 Ill. App. 3d
626, 633, 691 N.E.2d 65 (same), appeal denied, 178 Ill. 2d 576, 699 N.E.2d
1031 (1998).
24
We recognize that this question likely has been rendered academic, in
light of our holding in part II of this opinion that the aggregate limit for
professional liability coverage for Lexington Healthcare at the Greenwood
facility is only $1 million, and there are thirteen separate claimants. Neverthe-
less, out of an abundance of caution, we will address the individual defen-
dants’ claim.
25
As we previously have explained; see footnote 23 of this opinion; a
major distinction between a deductible and a self-insured retention is that,
in the case of the latter, ‘‘the insurer’s full policy limits will be available to
respond to a loss after the [self-insured retention] has been satisfied,’’
whereas, with the former, the deductible’s amount ‘‘is subtracted from the
policy limits, thereby reducing the amount of available insurance.’’ 2 B.
Ostrager & T. Newman, Handbook on Insurance Coverage Disputes (15th
Ed. 2011) § 13.13 [a], p. 1177. In the policy at issue, it appears that the
plaintiff drafted an endorsement that purported to be, and possessed all of
the attributes of, a self-insured retention, but it also attempted to retain
for itself the advantageous reduction in liability limits associated with a
deductible. We agree with the individual defendants that such a hybrid
approach is readily susceptible to confusion, and that the plaintiff, if it
wanted to employ it, was obligated to delineate its parameters with precision.
Paragraph D of endorsement no. 5 falls well short in this regard.