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CHICAGO INS. CO. v. HALCOND

May 21, 1999

CHICAGO INSURANCE COMPANY, PLAINTIFF,
v.
FRANK HALCOND, RN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Kaplan, District Judge.

MEMORANDUM OPINION

This is an action to declare that (1) a policy of insurance issued to defendant Frank Halcond is void ab initio and may be rescinded, and (2) the plaintiff is not obligated to defend Halcond in two personal injury cases brought against him. Discovery having been completed, plaintiff moves for summary judgment.

Facts

The Initial Application

Frank Halcond has practiced as a nurse/anesthetist since 1970.

On March 26, 1996, he applied to plaintiff Chicago Insurance Company ("Chicago") for an Individual Nurse Anesthetist Professional Liability claims-made policy for the period April 1, 1996 to April 1, 1997. Question 4 on the form was captioned "professional title" and provided two boxes, one for "CRNA" (doubtless an acronym for certified registered nurse anesthetist although that is not made clear on the application form) and the other for "student nurse anesthetist" as well as a blank in which to insert the applicant's number of years in practice. Halcond check the CRNA box. In addition, he added the letters CRNA after his signature at the end of the application. Chicago duly issued the policy.

The Gomez and Bourodimos Incidents

On September 23, 1996, Halcond served as the nurse-anesthetist under the direction of a physician during a surgical procedure performed on Francisca Gomez at the Queens Women's Medical Services Center. A catastrophic event occurred. Ms. Gomez was taken to Elmhurst Hospital but resuscitative efforts failed and she remains in an irreversible coma/persistent vegetative state. It is undisputed that Halcond did not notify Chicago of the incident prior to being sued more than a year later.

On March 20, 1997, Halcond served as the nurse-anesthetist under the supervision of another physician during a plastic surgery procedure performed on Angela Bourodimos. Another catastrophic event occurred. Ms. Bourodimos became unresponsive and was rushed to New York Hospital. Apart from the inference to be drawn from the fact that she is represented here by her mother and court-appointed guardian in consequence of her mental incompetence, the record before this Court is silent as to the outcome in her case. In any event, Halcond did not notify Chicago of this incident either before he was sued many months later.

The 1997-98 Renewal Application

On March 26, 1997, Halcond applied for renewal of the Nurse Anesthetist Professional Liability claims-made policy for the period April 1, 1997 to April 1, 1998. In response to a question on the application form whether any facts or circumstances had occurred in the past year "that might give rise to a claim or suit," Halcond checked "No."

The Gomez and Bourodimos Lawsuits

In December 1997, personal injury suits were brought by Gomez and Bourodimos' guardian against Halcond and others allegedly involved in the incidents allegedly resulting in their injuries. Halcond was served with the Gomez complaint on December 22, 1997 and the Bourodimos complaint on January 21, 1998. Although Halcond claims to have given telephonic notice to Chicago's "agent/broker" and to have forwarded the pleadings to Chicago by mail, he concedes that the mailings were returned. It is undisputed that Chicago first learned of these actions on March 13 (Bourodimos) and March 23, 1998 (Gomez).

The 1998-99 Renewal

The record does not contain Halcond's application to renew his policy for the April 1, 1998 to April 1, 1999 year. Nevertheless, it is undisputed that Chicago renewed the policy for that additional one year term on April 3, 1998.

Subsequent Events

On May 8, 1998, Chicago issued a disclaimer to Halcond with respect to the Gomez and Bourodimos claims. The letter makes clear the carrier's view that Halcond's March 1997 statement in the first renewal application that nothing had occurred in the preceding year "that might give rise to a claim or suit" was materially false given his knowledge of the Gomez and Bourodimos incidents. Further, it asserted that the policy was "deemed void as of its inception" and recited that the broker was forwarding a check to Halcond under separate cover for the full amount of the premium he had paid. In addition, the letter contended that Halcond had breached his obligation to forward the pleadings in the Gomez and Bourodimos cases to Chicago "as soon as practicable" and that Chicago was not obliged to defend or indemnify Halcond on that ground as well.*fn1

Some time in May 1998, it came to Chicago's attention that Halcond was not a certified registered nurse anesthetist at the time of or subsequent to his application for the policy. It now is undisputed that his certification expired on July 31, 1988.*fn2

On June 23, 1998, Chicago commenced this action seeking a declaration that it is not obliged to defend or indemnify Halcond in the Gomez and Bourodimos cases on the grounds that (1) the 1997-98 policy is void ab initio in consequence of his concealment and affirmative misrepresentation of material facts in the procurement of the original policy and the renewal, viz. the false assertion in the original application that he was a CNRA and the negative response in the renewal application to the question about incidents ...


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