FEDERAL COURT RULES THAT CGL CARRIER, NOT AUTO CARRIER, OWES INDEMNITY AFTER PATIENT FATALLY INJURED IN TRANSIT TO AMBULANCE

The U.S. District Court for the Western District of Texas last Tuesday ruled in favor of a commercial auto carrier  for  an  ambulance  company  in  a  coverage  dispute  with  the  company’s  CGL  carrier.   The controversy arose when a patient was injured, and later died, after the stretcher she was on tilted and dropped her.  In National Casualty Co. v. Western World Ins. Co., the Court held that the underlying accident was covered by the ambulance company’s CGL policy, that it was not covered by the operative commercial auto policy, and that the auto carrier was entitled to subrogation in the amount that it had contributed to the settlement of the underlying lawsuit.

The  parties  had  filed  cross  motions  for  summary  judgment  to  construe  the  duty  to  indemnify  the ambulance company for the settlement of the underlying suit.  The court reviewed the facts established in the underlying lawsuit, and determined that the accident — which occurred before the stretcher had been attached to the ambulance — did not fall under the auto policy, which provided that coverage existed when an accident results from the “use of a covered auto.”  The “use” of the ambulance did not extend to the entire loading and unloading process, but only to the actual placement or removal of persons from the ambulance.  Similarly, because the ambulance was not in “use,” the accident did not fall under an exclusion from the CGL carrier’s policy.  Finally, the court evaluated the auto carrier’s contractual subrogation rights and determined that it was entitled to recover the $100,000 it contributed to the settlement of the underlying claim.

This case was the second coverage action arising out of the same set of underlying facts.  In the earlier coverage suit, the district court ruled (and the Fifth Circuit Court of Appeals affirmed in February of this year) that the auto carrier had no duty do defend, but that the question of indemnity was not yet ripe.