John M. Kirby
Mitsui Sumotomo Insurance v. Duke University Health System | Number of occurrences
In Mitsui Sumotomo Insurance v. Duke University Health System, decided by the Fourth Circuit Court of Appeals on February 11, 2013, the court addressed the issue of whether a claim involved one or multiple occurrences.
In this case, a hospital mistakenly used hydraulic fluid to clean surgical instruments. (Workers did not realize that barrels contained hydraulic fluid, which had been used to renovate two elevators at the hospital.) Several patients sued. The insurer (for the company that placed the barrels at the original location) argued that it was liable for only the $1 million "per occurrence," limit; the insured argued that each surgical procedure constituted a separate occurrence, thereby invoking greater coverage. The court, applying North Carolina law, held that under the proximate cause theory, an event constituted one occurrence when there was but one proximate, uninterrupted, and continuing cause that resulted in all of the injuries and damages.
The court acknowledged that there was no North Carolina case directly on point. It relied largely on a prior N.C. Supreme Court case (Gaston Dye) and other cases to extrapolate North Carolina law on this issue. "The only action that Automatic Elevator took in this case was placing the barrels of hydraulic fluid in its designated storage area at DHRH. Consequently, [we believe that] the Supreme Court of North Carolina would find that the hydraulic fluid mistake involved one occurrence because it would similarly look to Automatic Elevator's single act of negligence rather than Duke's intervening actions." There was a strong dissent from one Judge.
This was in fact a very close call. Numerous cases address the issue of the number of occurrences in insurance policies. It can be relevant for the purpose of determining the total coverage available, or for determining the number of deductibles that apply. Many cases rule on these issues in favor of the insured.
John Kirby has handled numerous insurance disputes in North Carolina, including disputes regarding the number of occurrences in an insurance policy.