FEDERAL DISTRICT COURT GRANTS SUMMARY JUDGMENT IN FAVOR OF GENERAL LIABILITY INSURER ON HOME HEALTH SERVICE’S AUTO POLICY CARRIER’S DUTY TO DEFEND

December 5, 2012

Judge Keith P. Ellison, a Federal District Judge in the Houston Division of the Southern District of Texas, issued an order last Monday on pending motions for summary judgment filed by co-insurers in Colony Ins. Co. v. Progressive County Mut. Ins. Co., C.A. No. 4:12-cv-167 (S.D. Tex. Nov. 26, 2012).  The insured,

Bell  Tech  Enterprises,  was  providing services  to  Carlos  Jackson,  who was  confined  to  a wheelchair, afflicted with cerebral palsy and other serious conditions.  In July 2008, Jackson was transported in a van owned by Bell Tech, which broke down at a gas station.  The time Jackson spent in the broken down van is disputed, but it was undisputed that Jackson died later that day from hyperthermia and dehydration due to “environmental exposure.”

Jackson’s estate filed suit against Bell Tech in state court.  Bell Tech tendered the defense and indemnity of the matter to its general and professional liability insurer, Colony Insurance Company.  The court found that Colony’s letter to Progressive “tendering to Progressive Insurance as a co-carrier that may have a potential duty to defend and indemnify our mutual insured,” and inviting Progressive to join in the defense, was a sufficient tender on behalf of Bell Tech Bell Tech’s rights were subrogated to Colony under the transfer of rights provision in the Colony policy.

The court further found Progressive had a duty to defend.  The Progressive auto policy covers damages caused by “accident and resulting from the . . . use of a covered “auto.”” Progressive argued the auto was not the but for cause of Jackson’s death and that the allegations are of medical negligence related to Bell Tech’s custodial care of Jackson. The court disagreed.  Jackson’s injuries occurred while the vehicle was being used for one of its inherent purposes, transporting patients; the purpose of the vehicle had not yet been fulfilled as Bell Tech had not finished transporting Jackson; the hyperthermia allegedly occurred while Jackson was in the van, which is within the natural territorial limits of the vehicle; and a hot July day in a vehicle caused the “environment exposure” that caused the hyperthermia.

The court denied summary judgment to both Colony and Progressive on the duty to indemnify, because there were disputes related to the length of time Jackson was actually in the van and whether Jackson was provided water in accordance with his care plan.  Thus, the court found a genuine issue of material fact as to whether or not the auto was the but for cause of hyperthermia and dehydration.