New York’s highest court unanimously ruled that Buffalo-based Kaleida Health’s self-insurance plan covered a physician treating patients on call. The ruling puts the health system on the hook for most of a malpractice settlement above the physician’s primary policy.
The Court of Appeals affirmed a 2024 Appellate Division ruling in Kolli v. Kaleida Health, according to an Oct. 22 post from Hacker Murphy, the law firm that represented the physician’s excess insurer.
Five things to know:
1. The case. Venkateswara Kolli, MD, treated a patient at Kaleida’s DeGraff Memorial Hospital as part of on-call duties under his employment agreement. The patient sued, and the case settled. Dr. Kolli has since died, and his estate is the plaintiff in the coverage case. The settlement amount was not disclosed. Kaleida, Dr. Kolli’s primary insurer MLMIC and his excess insurer, Healthcare Professionals Insurance Co., each fronted one-third of the settlement, pending a court decision on who owed what.
2. On-call work was covered. Kaleida argued its plan didn’t cover Dr. Kolli’s care, but the courts found nothing in it that excluded on-call patients. They read the plan as limiting coverage only when Dr. Kolli treated his own private practice patients at Kaleida.
3. Self-insurance counts as insurance. Kaleida argued its plan wasn’t insurance. The court looked at what the plan actually did: it protected physicians against risk, required claims reporting and had terms on coverage, exclusions and priority. Even if it weren’t technically insurance, the court said it qualified as “equivalent coverage” under HPIC’s policy.
4. Kaleida pays most of the excess. MLMIC is the primary insurer, with a $1.3 million per-person limit. Above that, Kaleida owes 91.67% and HPIC owes 8.33%, under the Appellate Division ruling the high court affirmed.
5. Contract wording decided it. The court said Kaleida’s reading of the employment agreement would have effectively nullified other provisions in the agreement guaranteeing coverage for physicians doing their employment duties.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
