Facts

National Fire & Marine Insurance Company (National) brought an action against California Minimally Invasive Surgical Center, Inc. (CMISC); John Chiu, M.D.; Stan Gerbrandt; and Wija Carbajal.

Dr. Chiu submitted a renewal application on behalf of CMISC for coverage with National. In the renewal application, Dr. Chiu indicated that no current or former employees or contractors had ever been indicted for, charged with, or convicted of any act committed in violation of any law or ordinance, and had never been the subject of disciplinary or investigative proceedings, or a reprimand by a governmental license board or administrative agency, hospital or professional association. Dr. Chiu further represented that CMISC had only been involved in one prior claim, potential claim, or suit arising out of the rendering or failing to render professional services. Thereafter, National issued the Professional Liability Policy (the Policy) to CMISC.

The underlying action was brought by Gerbrandt and Carbajal against Dr. Chiu, alleging professional negligence and medical malpractice. National declined to provide a defense or indemnify CMISC under the Policy and then filed suit, seeking a rescission of the Policy.

PLAINTIFF'S CONTENTIONS: Plaintiff asserted that the Policy provided no coverage and gave rise to no obligation on the part of plaintiff to either defend, indemnify, or otherwise extend any benefits of any type on behalf of CMISC and Dr. Chui for the claims of Gerbrandt and Carbajal, as set forth in their medical-negligence lawsuit.

Plaintiff asserted that it was not required to provide a defense or indemnify defendants under the policy it issued to CMISC because none of the allegations in the underlying action were against any insured. Rather, the allegations were against Dr. Chiu as an unlicensed physician, and California Back and California Spine, neither of which were insured under plaintiff's policy issued to CMISC. Plaintiff contended that material misrepresentations were made by defendants CMISC and Dr. Chiu. Material facts were concealed by said defendants. Defendants represented that no current or former employees or contractors had ever been indicted for, charged with, or convicted of any act committed in violation of any law or ordinance, and had never been the subject of disciplinary or investigative proceedings, or a reprimand by a governmental license board or administrative agency, hospital or professional association. Defendants further represented that they had only been involved in one prior claim, potential claim, or suit arising out of the rendering or failing to render professional services. Defendants represented that all statements in the applications and renewal applications or the policy were true and correct, which plaintiff relied upon to renew and restate the policy.

DEFENDANTS' CONTENTIONS: Defendants denied all contentions.

Result

The court entered final judgment in favor of National, allowing it to rescind its professional liability policy.