No matter how long and technical the wording of an insurance policy may be, it may contain ambiguities that can only be resolved with expert legal assistance. A case on point concerned an eight-figure loss sustained by an operator of private hospitals arising from a breast surgeon’s negligent and criminal acts.
The company inherited the liabilities of a predecessor which owned private hospitals where the surgeon performed operations. The General Medical Council suspended him from practising on the basis that he had negligently performed numerous mastectomy operations on breast cancer patients (the negligent operations).
He was subsequently convicted of assaulting patients, causing them grievous bodily harm, and received a 20-year prison sentence. His method was to falsely report pathology before performing unnecessary mastectomies (the criminal operations). About 750 patients later successfully sued the company, which estimated its outlay on compensation and legal costs at more than £37 million.
The company claimed under a policy by which it had insured itself in respect of its predecessor’s liabilities for the acts and omissions of its employees or those who provided medical or surgical services at its hospitals. The insurer argued that its liability was limited to £10 million, that sum being the policy’s limit of indemnity in respect of losses attributable to one source or original cause.
The company asserted that the negligent and criminal operations should be viewed as giving rise to separate losses, each arising from different sources or original causes, and that it was thus entitled to two limits of indemnity, totalling £20 million. The insurer argued that all the company’s losses arose from a single source or original cause, namely the surgeon or the surgeon and his conduct.
Upholding the company’s claim, the Court found that there were two distinct aspects to the surgeon’s conduct and clear causative differences between the losses arising from the negligent and criminal operations. There were cardinal differences between operating negligently on patients suffering from cancer and the criminal performance of operations on patients who were not suffering from any medical condition that necessitated a mastectomy.
Also finding a distinction in the surgeon’s motivations in carrying out operations in the negligent and criminal categories, the Court concluded that they each had separate sources and original causes. The Court heard further argument as to the precise terms of its order, but its ruling meant that the company was entitled to an aggregate sum of £20 million from the insurer.