Mora et al v. Lancet Indemnity Risk Retention Group, Inc. et al
MEMORANDUM OPINION Signed by Judge Paula Xinis on 10/16/2017. (cags, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
CLAUDIA M. MORA et al.,
Civil Action No. PX 16-960
LANCET INDEMNITY RISK RETENTION
This case arises out of the unfortunate death of Juan G. Castillo, who suffered a fatal
heart attack after Dr. Ishtiaq A. Malik treated Mr. Castillo at Dr. Malik’s urgent care clinic in
Silver Spring, Maryland. Mr. Castillo’s wife and three children brought this declaratory
judgment action against Dr. Malik’s insurer, Lancet Indemnity Risk Retention Group, Inc.
(“Lancet”), after Lancet disclaimed coverage in Plaintiffs’ underlying medical malpractice
action, citing Dr. Malik’s failure to cooperate as sufficient basis to deny coverage.1
This Court’s prior opinion and order on the parties’ cross motions for summary judgment
left one narrow issue for trial: whether Lancet could demonstrate that Dr. Malik’s failure to
cooperate prejudiced Lancet’s ability to defend the underlying medical malpractice claim against
Dr. Malik’s entities. The Court held a two-day bench trial on July 18 and 20, 2017. The Court
has heard the evidence, reviewed the exhibits, considered the materials submitted by the parties,
and had the benefit of the arguments of counsel. It now issues this Decision as its findings of
fact and conclusions of law in compliance with Rule 52(a) of the Federal Rules of Civil
The following entities were named as defendants in the underlying malpractice action: Ishtiaq A. Malik, M.D.,
P.C.; Dr. Malik’s medical practices, Advanced Walk-In Urgent Care, LLC and Union Multi-Care Medical Center,
Inc.; and an entity owned by Mr. Castillo’s prior physician, Dr. Richard O. Akoto. See Complaint, Pl.’s Ex. 17.
Procedure.2 It finds the facts as stated in this opinion based upon evaluating the evidence,
drawing all reasonable inferences, and assessing witness credibility. For the reasons set forth
below, the Court finds that Plaintiffs/Counterclaim Defendants are entitled to a judgment
declaring that Advanced Walk-In Urgent Care, LLC and Union Multi-Care Medical Center, Inc.
are insured by Lancet under Policy Number L1201402002735 for the claims asserted against
them in the underlying medical malpractice case brought before the Circuit Court of
Montgomery County, Maryland, Mora v. Advanced Walk-In Urgent Care, LLC, Case No.
407276-V. The Court also finds that Lancet is thus liable for the money damages of its Insureds
pursuant to the Policy’s terms.
On March 2, 2016, Plaintiffs Claudia Mora, her two minor children, and her son, Juan
Carlos Castillo (“Plaintiffs”), filed this declaratory judgment action in the Circuit Court for
Montgomery County against Lancet Indemnity Risk Retention Group, Inc. (“Lancet”), Advanced
Walk-In Urgent Care, LLC, Union Multi-Care Medical Center, Inc., and Dr. Richard Akoto in
both his individual capacity and as a professional corporation (collectively, “Dr. Akoto”). See
ECF No. 2. Plaintiffs ask the Court to declare that Defendant Lancet is required under its group
professional liability insurance policy with Advanced Walk-In and Union Multi-Care to satisfy
the judgment rendered against its Insureds and in favor of Plaintiffs in a medical malpractice
case decided in the Circuit Court for Montgomery County.
Rule 52(a) provides, in relevant part, that “[i]n an action tried on the facts without a jury . . . the court must find
the facts specially and state its conclusions of law separately. The findings and conclusions . . . may appear in an
opinion or a memorandum of decision filed by the court.” To comply with this rule, the court “‘need only make
brief, definite, pertinent findings and conclusions upon the contested matters,’ as there is no need for ‘overelaboration of detail or particularization of facts.’” Wooten v. Lightburn, 579 F. Supp. 2d 769, 772 (W.D. Va. 2008)
(quoting Fed. R. Civ. P. 52(a) advisory committee’s note to 1946 amendment). Rule 52(a) “does not require the
court to make findings on all facts presented or to make detailed evidentiary findings; if the findings are sufficient to
support the ultimate conclusion of the court they are sufficient.” Darter v. Greenville Cmty. Hotel Corp., 301 F.2d
70, 75 (4th Cir. 1962) (quoting Carr v. Yokohama Specie Bank, Ltd., 200 F.2d 251, 255 (9th Cir. 1952)).
Lancet removed the case to this Court on April 1, 2016 based on diversity of citizenship
pursuant to 28 U.S.C. § 1332 and filed a counterclaim. ECF Nos. 1 & 22.3 Through its
counterclaim, Lancet asks this Court to declare its insurance agreement with the Defendants void
because one of the policy’s insureds, Dr. Ishtiaq Malik, failed to comply with the Policy’s notice
and cooperation provisions. ECF No. 22 at 15–16. Plaintiffs moved for summary judgment and
Lancet filed a cross-motion for summary judgment. See ECF Nos. 74 & 76.
On March 1, 2017, the Court issued a Memorandum Opinion and Order denying both
motions. See ECF Nos. 85 & 86. It concluded that Lancet could not disclaim coverage based on
the insurance Policy’s notice provision as a matter of law. However, factual disputes prevented
the Court from deciding whether Lancet could disclaim coverage based on the insurance policy’s
On April 1, 2016, Plaintiffs moved to file a second amended complaint to clarify that the
requested relief includes a monetary judgment up to the Policy limit of $1,000,000, plus postjudgment interest of $118,722.50. See ECF No. 93-3 at 9. The Court denied Plaintiffs’ motion
as moot on July 10, 2017, after the parties agreed at a telephonic hearing that Plaintiffs’ failure to
request monetary relief in the first amended complaint did not preclude Plaintiffs from
recovering damages in the event that Plaintiffs prevail on the merits. See ECF No. 107. The
parties therefore agreed to table the discussion of damages until the Court rendered a judgment
on liability. Therefore, this Memorandum Opinion will only assess Lancet’s liability under the
On May 16, 2016, the parties jointly stipulated that Defendants Akoto, Advanced Walk-In, and Union Multi-Care
should be realigned as plaintiffs because their interests align with those of the Plaintiffs. See ECF No. 61. This left
Lancet as the only defendant in the case. Dr. Akoto’s counsel then withdrew their appearance and Dr. Akoto has not
participated in the litigation since. Advanced Walk-In and Union Multi-Care never entered appearance and have not
participated in the case.
FINDINGS OF FACT
A. The Policy
Defendant Lancet Indemnity Risk Retention Group, Inc. (“Lancet”) is a risk retention
group chartered in Nevada and organized pursuant to the Liability Risk Retention Act
(“LRRA”), 15 U.S.C. §§ 3901 et seq. Risk retention groups are different than other insurance
companies because they must be owned by their insureds and their members are relatively
homogeneous. For example, Lancet only insures medical professionals and is owned and funded
by the physicians in the group. See Trial Tr., 27, July 18, 2017 (Teter Testimony).
In 2014, Lancet issued a claims-made-and-reported policy4 (“Policy”) to Union MultiCare Medical Center, Inc. (“Union Multi-Care”) and Advanced Walk-In Urgent Care, LLC
(“Advanced Walk-In”), both located in the same office in Silver Spring, Maryland. See Policy,
Def.’s Ex. 1. Dr. Ishtiaq A. Malik (“Dr. Malik”) owned and operated both practices. He and his
colleague, Dr. Lendicta Q. Madden (“Dr. Madden”), were named as additional Insureds in the
Policy.5 See Def.’s Ex. 1 at 12. The Policy commenced on July 1, 2014 and expired on July 1,
2015. Id. at 2.
The Policy contains a “Cooperation and Assistance” clause which states, in pertinent
The Insured must cooperate and assist the Company and the appointed defense
counsel in all aspects of the investigation and defense; and shall, upon request,
submit to examination and interrogation by a representative of the Company,
under oath if required, attend hearings, depositions and trials, assist in effecting
any settlement, securing and giving evidence, and obtaining the attendance of
witnesses, all without charge to the Company.
A claims-made-and-reported policy is a policy in which a claim must be both made against the insured and
reported to the insurer during the policy period for coverage to apply.
Union Multi-Care, Advanced Walk-In, and Dr. Malik will collectively be referred to as the “Insureds” for the
remainder of this Opinion. Although Dr. Madden is also a named insured under the Policy, her conduct is not at
issue in this case.
The Insured shall further cooperate with the Company to do whatever is
necessary to secure and affect any rights of indemnity, contribution or
apportionment that the Insured may have. Any failure of the Insured to
cooperate that prejudices our ability to defend any Claim, shall void this Policy,
nullify coverage and will disqualify the Insured from being eligible to exercise
the option to purchase a Extended Period endorsement.
Def.’s Ex. 1 at 34 (emphasis in original).
The Policy also includes an advance consent provision. This provision operates
independently of the notice and cooperation provision, and states in pertinent part, that Lancet
“ha[s] the right and duty to defend any Claim covered by the Policy.” Def.’s Ex. 1 at 15
(emphasis in original).
B. The Underlying Medical Malpractice Action
On January 15, 2015, Juan G. Castillo visited Dr. Malik at Advanced Walk-In seeking
treatment for chest pains. See Trial Tr., 182–83, July 20, 2017 (Castillo Testimony). Dr. Malik
had not previously treated Mr. Castillo. Mr. Castillo was not conversant in English, and Dr.
Malik did not speak any Spanish, Mr. Castillo’s native tongue. Under these circumstances, Dr.
Malik’s practice was to ask one of Advanced Walk-In’s bilingual staff members to be present at
the appointment and translate for him. See Trial Tr., 77, July 20, 2017 (Madden Testimony).
However, no direct evidence established whether a bilingual staff member translated for Dr.
Malik during the January 15 appointment with Castillo.
During the same appointment, Dr. Malik prepared a short consultation note explaining his
physical assessment of Mr. Castillo, the diagnostic tests administered, and Dr. Malik’s proposed
follow-up care for Mr. Castillo. See Def.’s Ex. 2. The consultation note explains that Castillo
complained of atypical chest pain and shortness of breath a few times a day. Dr. Malik conducted
both a treadmill stress test and an electrocardiogram (“EKG”). The treadmill stress test had to be
stopped after only three minutes because, according to the consultation note, Mr. Castillo was
experiencing chest pain. Id. Dr. Malik then prescribed Mr. Castillo Metoprolol, a common beta
blocker used to treat chest pain, and rendered no further treatment. Trial Tr., 212, July 18, 2017
(Schwartz Testimony). Eight days later, Mr. Castillo died from a sudden cardiac event while at
After Mr. Castillo’s death, his widow, Claudia Mora, and her children (“Plaintiffs”)
prepared to file a medical malpractice claim against the Union Multi-Care, Dr. Malik, P.C., and
possibly Advanced Walk-In, as well as Castillo’s regular treating cardiologist, Dr. Akoto. On
July 2, 2015, Plaintiffs’ counsel notified Lancet in writing of the impending suit. See Def.’s Ex.
7. Plaintiffs’ counsel also attached to that letter Dr. Malik’s consultation notes from Castillo’s
visit and the invoice for services. Id.
Lancet’s claims representative, Mr. Christopher Teter, immediately reviewed the
Insured’s Policy and assigned defense counsel, Mr. Brad Kelly, to defend the malpractice action.
See Trial Tr., 28, July 18, 2017 (Teter Testimony). Teter and Kelly attempted to call Dr. Malik,
sent him several emails, and sent letters to Advanced Walk-In’s business address. Id. at 28–29.
Dr. Malik did not respond.
On July 15, 2015, Plaintiffs filed a medical malpractice claim against Dr. Malik, P.C.,
Advanced Walk-In, Union Multi-Care, and the professional corporation associated with Mr.
Castillo’s prior physician, Dr. Richard Akoto, with the State of Maryland Health Claims
Alternative Dispute Resolution Office (“HCADRO”). In that action, the Plaintiffs alleged that
Dr. Malik negligently failed to refer Mr. Castillo to a cardiologist after evaluating him, leaving
Castillo’s heart condition undiagnosed and untreated, resulting in his death.
On July 24, 2015, Plaintiffs filed a medical malpractice/wrongful death case in the
Circuit Court for Montgomery County, naming as defendants the Insureds and Dr. Akoto. See
Mora v. Advanced Walk-In Urgent Care LLC, Case No. 407276-V (Montgomery Cnty. Cir. Ct.
filed July 24, 2015) [hereinafter the “Malpractice Lawsuit”]. That same day, Teter sent a letter
to Dr. Malik informing him that Lancet: (i) received the July 2, 2015 letter from Plaintiffs; (ii)
appointed defense counsel on the Insureds’ behalf; (iii) defense counsel required the Insureds
and Dr. Malik’s assistance and cooperation in discussing the allegations of the July 2, 2105
letter; and (iv) Lancet’s investigation remained ongoing and defense under the Policy was being
provided under a strict reservation of rights. See Def.’s Ex. 8; see also Trial Tr., 60–61, July 18,
2017 (Teter Testimony). Dr. Malik did not respond to this letter.
Although Kelly was initially hired as defense counsel for Dr. Malik and the other
Insureds, Kelly never entered his appearance in the underlying Malpractice Lawsuit. Trial Tr.,
84, July 18, 2017 (Kelly Testimony). At trial before this Court, Kelly explained that he did not
enter his appearance because he never spoke to Dr. Malik and thus never obtained his consent to
represent him. Id. at 85. He further stated that he could not, and would not, represent Dr. Malik
because doing so without consent would constitute an ethical violation and subject Kelly to
professional liability. Id. at 85–86. Kelly was silent, however, on whether he could or should
represent Lancet’s interests as the Insurer since such representation would seemingly be
consistent with the advance consent provision in the Policy.
At the same time, Teter made multiple attempts to contact Dr. Malik. On August 6,
2015, Teter sent Dr. Malik correspondence to remind him of the July 24th letter and inform him
that his failure to cooperate with Lancet during their coverage investigation was a violation of
the Policy’s cooperation provision. See Def.’s Ex. 9. Lancet also contacted Dr. Malik’s former
counsel in an unrelated False Claims Act action, who informed Lancet that Dr. Malik had moved
to Pakistan and did not intend on returning to the United States. Teter sent two more letters to
Dr. Malik’s last known address in Silver Spring, Maryland, on August 27, 2015 and October 6,
2015. See Def.’s Ex. 10, 11. Dr. Malik failed to respond to any of these letters or otherwise
contact Lancet. Additional emails and phone calls to Dr. Malik also went unanswered.
Accordingly, on October 16, 2015, Teter sent another letter to Dr. Malik stating that because Dr.
Malik failed to comply with his obligations under the Policy, Lancet was disclaiming coverage
with respect to the Malpractice Lawsuit. See Def.’s Ex. 12 at 6. The letter also informed Dr.
Malik that “Lancet is withdrawing the defense that was being provided to you under a strict
reservation of rights.” Id.
On February 1, 2016, Plaintiffs’ counsel informed Lancet in writing that he had learned
of Dr. Malik’s whereabouts in Pakistan and provided Lancet with two possible Pakistani
addresses. Lancet then sent correspondence on February 26, 2016 to both addresses, referencing
Lancet’s prior attempts to communicate with him. Lancet informed Dr. Malik that because
Lancet was unable to reach him to investigate and defend against the claims in the Malpractice
Lawsuit, Lancet disclaimed coverage. See Def.’s Ex. 13.
Thereafter, Lancet never participated in the Malpractice Lawsuit despite the suit’s
infancy. No attorney entered an appearance for the Insureds, nor did Lancet take any further
action to investigate or defend against the claims prior to denying coverage. Specifically, Lancet
did not answer the complaint, made no effort to obtain records, and did not retain medical
experts or interview any of the employees at Advanced Walk-In at the time of Mr. Castillo’s
appointment. Trial Tr., 59–60, July 18, 2017 (Teter Testimony).
In February 2016, Plaintiffs filed a Request for Entry of an Order of Default against the
Insureds, and the Order was granted on March 11, 2016. A copy of this Order was mailed to
Lancet and to its outside counsel with a cover letter notifying them that they had thirty days to
move to vacate that Order pursuant to Md. Rule 2-613(d).
The Circuit Court then scheduled an ex parte damages hearing on August 11, 2016.
Plaintiffs’ counsel informed Lancet of the hearing by a letter dated July 15, 2016. On August 8,
2016 – and despite Lancet’s purposeful previous failure to participate in the liability phase of the
action – Lancet requested leave to intervene in the damages phase. The motion was unopposed
and granted. Lancet also sought to postpone the ex parte damages hearing and was denied.
Ultimately, the Circuit Court entered judgment against the Insured, jointly and severally, for
Plaintiffs seek a declaration pursuant to the Maryland Declaratory Judgment Act, Md.
Code Ann., Cts. & Jud. Proc. §§ 3-401 et seq., that pursuant to the terms of the Policy, Lancet is
required to pay all money damages that the Insureds incurred in the Malpractice Lawsuit. In
contrast, Lancet seeks a judgment pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. §
2201, declaring that the Policy does not obligate Lancet to provide coverage for the claims
asserted in the Malpractice Lawsuit and that the Policy is void because of Dr. Malik’s failure to
The Declaratory Judgment Act provides that “[i]n a case of actual controversy within its
jurisdiction, . . . any court of the United States, upon filing of an appropriate pleading, may
declare the rights and legal relations of any interested party seeking such declaration, whether or
The parties do not argue that different standards apply under Md. Code Ann., Cts. & Jud. Proc. §§ 3-401 et seq.
and 28 U.S.C. § 2201. Thus, the analysis here does not differentiate between the two bases for declaratory relief.
not further relief is or could be sought.” 28 U.S.C. § 2201. Three criteria must be met before the
Court may exercise jurisdiction over a declaratory judgment action: (1) the complaint [must]
allege an “actual controversy” between the parties “of sufficient immediacy and reality to
warrant issuance of a declaratory judgment;” (2) the court [must] possess an independent basis
for jurisdiction over the parties (e.g., federal question or diversity jurisdiction); and (3) the court
[must] not abuse its discretion in its exercise of jurisdiction. Volvo Constr. Equip. N. Am., Inc. v.
CLM Equip. Co., Inc., 386 F.3d 581, 592 (4th Cir. 2004). All three criteria are met here. An
actual controversy exists between Plaintiffs, as injured third parties to the insurance contract, and
the insurer, Lancet, regarding the extent of Lancet’s coverage responsibilities under the Policy.
See O’Bannon v. Friedman’s, Inc., 437 F. Supp. 2d 490, 494 (D. Md. 2006) (confirming that a
dispute between a liability insurer and an injured third party regarding coverage responsibilities
presents an actual controversy for purposes of the Federal Declaratory Judgment Act). The
Court possesses diversity jurisdiction over this controversy, and no good reason exists to decline
exercise of jurisdiction. Cf. Volvo Constr. Equip. N. Am. Inc., 386 F.3d at 594 (explaining that
“a district court must have ‘good reason’ for declining to exercise its declaratory judgment
Turning to the merits, the Policy’s cooperation provision reads, in pertinent part:
The Insured shall further cooperate with the Company to do whatever is necessary
to secure and affect any rights of indemnity, contribution or apportionment that
the Insured may have. Any failure of the Insured to cooperate that prejudices our
ability to defend any Claim, shall void this Policy, nullify coverage and will
disqualify the Insured from being eligible to exercise the option to purchase a
Extended Period endorsement.
Def.’s Ex. 1 at 34 (emphasis added).
It is undisputed that Dr. Malik, who is an additional Insured on the Policy, failed to
cooperate with Lancet. The question remaining, therefore, is whether Dr. Malik’s failure to
cooperate “prejudice[d] [Lancet’s] ability to defend” the claims made by Plaintiffs in the
underlying medical malpractice case. Id. This necessitates a definition of the word “prejudice”
as it is used in the Policy. Per agreement of the parties, and by dint of this Court’s prior choice
of law analysis, see ECF No. 85, the Court will apply Maryland law.
Maryland courts interpret the language of an insurance policy with the same principles
and rules of construction used to interpret other contracts. Connors v. Gov’t Employees Ins. Co.,
442 Md. 466, 480 (2015). Like any other contract, an insurance contract is “measured by its
terms unless a statute, a regulation, or public policy is violated thereby.” Id. (quoting Pacific
Indem. Co. v. Interstate Fire & Cas. Co., 302 Md. 383, 388 (1985)). The words of insurance
contracts are given their customary, ordinary, and accepted meaning, as determined by the
fictional “reasonably prudent lay person.” Id. (quoting Beale v. Am. Nat’l Lawyers Ins.
Reciprocal, 379 Md. 643, 660 (2004)). When contractual language is plain and unambiguous,
Maryland courts enforce the terms of the contract as a matter of law. Calomiris v. Woods, 353
Md. 425, 445 (1998); Pacific Indem. Co., 302 Md. at 389.
To determine the accepted meaning of term “prejudice” in this case, the Court is guided
by Maryland Courts interpretation of the term “actual prejudice” as found in Maryland’s “noticeprejudice” rule, Md. Ins. Code Ann. § 19-110. Section 19-110 provides:
An insurer may disclaim coverage on a liability insurance policy on the ground
that the insured or a person claiming the benefits of the policy through the insured
has breached the policy by failing to cooperate with the insurer or by not giving
the insurer required notice only if the insurer establishes by a preponderance of
the evidence that the lack of cooperation or notice has resulted in actual prejudice
to the insurer.
Md. Ins. Code Ann. § 19-110 (emphasis added).
As the Court noted in its prior Memorandum Opinion,7 the applicable law in this case is a
vexing issue. At first blush, § 19-110 appears not to apply to the Policy because Lancet is a risk
retention group governed by the Liability Risk Retention Act (“LRRA”). The LRRA provides
that risk retention groups are only subject to the insurance laws of its chartering state, save for a
few limited exceptions. Nat’l Home Ins. Co. v. State Corp. Comm’n of Com. of Va., 838 F.
Supp. 1104, 1109–10 (E.D. Va. 1993). Lancet is chartered in Nevada and so Maryland’s statute
itself cannot reach Lancet.
Critically, however, the LRRA carves out an exception to this general rule for the laws of
a non-chartering state which govern the interpretation of insurance contracts. Section 3901(b) of
the LRRA provides:
Nothing in this chapter shall be construed to affect either the tort law or the law
governing the interpretation of insurance contracts of any State, and the
definitions of liability, personal risk liability, and insurance under any State law
shall not be applied for the purposes of this chapter, including recognition or
qualification of risk retention groups or purchasing groups.
15 U.S.C. § 3901(b) (emphasis added).
Accordingly, the LRRA’s exception would permit this court to apply §19-110.
Alternatively, the Policy chose to adopt a prejudice prong to its cooperation provision but
nowhere defines what the parties mean by “prejudice.” The Court must therefore look to
Maryland case law interpreting the term “prejudice” to guide its decision on the accepted
meaning of the term.
The parties agree that there is no difference in the meanings of the terms “actual
prejudice” in §19-110 and “prejudice” as the term is used in the Policy. Both parties relied upon
cases published after §19-110 was passed to interpret “actual prejudice.” See, e.g. ECF No. 100
at 5; ECF No. 101 at 3–4. This is for good reason. In Allstate Ins. Co. v. State Farm Mut. Auto.
Mora v. Lancet Indem. Risk Retention Grp., Inc., No. PX 16-960, 2017 WL 818718 (D. Md. Mar. 1, 2017).
Ins. Co., 363 Md. 106 (2001), the Maryland Court of Appeals thoroughly analyzed nearly fifty
years of jurisprudence in relation to §19-110, and effectively pronounced that the common law
and §19-110 definition of “prejudice” are the same. The Maryland Court of Appeals explained
that the General Assembly enacted §19-110 to end confusion in the common law surrounding the
notice and prejudice standards. Allstate, 363 Md. at 122 (“The General Assembly responded to
the Watson case, and also, perhaps, to the Indemnity Ins. Co. case, by enacting, in its 1964
session, what is now § 19-110 of the Insurance Article.”) (citing St. Paul Fire & Marine Ins. v.
House, 315 Md. 328, 332 (1989)). The Allstate Court explained:
The statute at least has wiped away any basic distinctions with respect to whether
prejudice is required. An insurer may not disclaim coverage for either lack of notice or
failure to cooperate unless it demonstrates that the deficiency has resulted in actual
prejudice to the insurer. Anything to the contrary in our pre 1964 case law is no longer
Id. After Allstate, therefore, it appears that when interpreting the contractual term “prejudice,”
looking to § 19-110 or Maryland case law will produce the same result.
Allstate also announced that the prejudice determination must focus on “whether the
insured’s wilful [sic] conduct has, or may reasonably have, precluded the insurer from
establishing a legitimate jury issue of the insured’s liability, either liability vel non or for the
damages awarded.” Id. at 127–28. This standard does not require the insurer to meet “almost
insurmountable burden of proving that the verdict was the result of the lack of cooperation.” Id.
at 128 (internal quotations and citation omitted). Rather, the insurer must show “that the failure
of cooperation has, in a significant way, precluded or hampered it from presenting a credible
defense to the claim.” Id. Importantly, the Maryland Court of Appeals later clarified that “actual
prejudice” contemplates harm that is “more than possible, theoretical, hypothetical, speculative,
or conjectural.” Nat’l Union Fire Ins. Co. of Pittsburgh, PA. v. Fund for Animals, Inc., 451 Md.
431, 454 (2017). The insurer bears the burden of demonstrating that the insured’s failure to
cooperate prejudiced it. Prince George’s Cty. v. Local Gov’t Ins. Tr., 388 Md. 162, 187–88
(2005) (“The insurer bears the burden of proof to show prejudice . . . . Courts have identified
four rationales for allocating the burden to the insurer. First, it is more equitable for the insurer
to bear the burden because the insurer seeks to disclaim the coverage. Second, it is more
difficult for the insured to prove a negative, that there was no prejudice, than for the insurer to
prove a positive, that there was prejudice. Third, the insurer is in a superior position to produce
evidence that it suffered prejudice. Finally, allocating the burden to the insurer encourages the
insurer to undertake a timely preliminary investigation.) (internal citations omitted).
Here, Lancet has failed to sustain this burden. Lancet claims prejudice from Dr. Malik’s
absence from the outset of the case, and principally relies on the testimony of Brad Kelly. Mr.
Kelly believed himself hamstrung in defending the case because he could not enter his
appearance on behalf of Dr. Malik. But as Plaintiffs’ malpractice expert, Albert Brault,
explained, Kelly is only half right. Brault, whose experience and credentials are unmatched in
the area of Maryland medical malpractice defense,8 opined that defense counsel can and do
represent both the insured’s and the insurer’s interests in the litigation, so long as those interests
coincide. See, e.g., Trial Tr., 148, July 20, 2017 (Brault Testimony). This dual representation,
Brault explains, fosters the overarching goal of promoting coverage for valid insurance claims.
Id. at 127. If this dual representation becomes conflicted, the attorney must choose to represent
Mr. Brault was admitted to the Maryland bar in 1959, and soon thereafter began practicing insurance defense. Mr.
Brault has handled hundreds of medical malpractice defense cases. He is a Fellow of the American College of Trial
Lawyers, of which he was Maryland State Chair from 1998–2000, and acted as chairman of the Appellate Courts
Judicial Selection Commission of Maryland from 1990–2000 and chairman of the Qualifications Committee for
Admission to the United States District Court for the District of Maryland from 1985–88. Mr. Brault served on the
Rules Committee of the Court of Appeals for the Maryland Bar from 1973–2013. He has received numerous awards
in recognition of his impressive litigation career and presented medical malpractice and general litigation lectures
before the American Bar Association, Georgetown University Law Center, Maryland State Bar Association,
American Board of Trial Advocates, and University of Maryland School of Law, amongst others. See Pl.’s Ex. 18.
either the insurer or insured, and advise the other to retain independent counsel. See generally
Md. R. Attorneys, Rule 19-301.8. See also Trial Tr., 148, July 20, 2017 (Brault Testimony).
Brault advised that where the conflict arises from a failure of the insured to cooperate, the
attorney must nonetheless vigorously defend on behalf of the insurer, and protect its potential
denial of coverage by issuing a reservation of rights letter. Id. at 149. This is precisely why the
Policy, as do all standard insurance policies, require the insured to give advance consent “that
allows the insurer to defend itself . . . [o]therwise, the insurance company would be totally
dependent on a doctor,” and unable to “to control the defense itself.” Id.
The Policy expressly provides for this possibility by granting Lancet “the right and duty
to defend any Claim covered by the Policy.” Def.’s Ex. 1 at 15. See also Trial Tr., 151, July 20,
2017 (Brault Testimony). Lancet’s refusal to defend at the outset not only falls below the
generally accepted practice in Maryland, but runs contrary to the plain language of Lancet’s own
insurance policy – language Brault calls “standard” and “boilerplate” – to defend the claims even
in the absence of the insured’s consent.9 Accordingly, even if Dr. Malik’s conduct frustrated
Lancet’s ability to represent the Insureds in the Malpractice Lawsuit, nothing prevented Lancet
from entering an appearance to defend the case on its own behalf. In fact, Lancet did just that
when it entered an appearance on the issue of damages shortly after the Circuit Court entered a
default judgment against the Insureds. Lancet’s own conduct, therefore, belies its argument that
it was prejudiced by Dr. Malik’s lack of cooperation. Rather, Lancet is prejudiced by its own
choice not to defend the action from the outset.10
William Artz, Lancet’s medical malpractice expert, was never asked expressly about the advance consent
provision, but interestingly Artz noted that Lancet could have hired another lawyer to enter an appearance in the
case to “do what he could” to defend the claims. Trial Tr., 115, July 18, 2017 (Artz Testimony).
Lancet also stresses that it was prejudiced by its inability to settle the case without Dr. Malik because the Policy
requires the Insured’s consent before a settlement can be consummated. See Trial Tr., 137–38, July 20, 2017 (Brault
Testimony); see also Policy, Def.’s Ex. 1 at 15. This is a red herring. As Brault emphasized. Lancet always had the
Lancet next argues that even if it had chosen to pursue the litigation, Dr. Malik’s absence
would have hamstrung Lancet on defending against Malik’s violation of standard of care.
Lancet’s experts stated that without Dr. Malik, Lancet could not ascertain important details about
Dr. Malik’s assessment of Castillo, why Dr. Malik stopped the stress test, how the doctor
interpreted the test results, or whether he provided Mr. Castillo with any follow-up instructions.
See Trial Tr., 115, July 18, 2017 (Artz Testimony). Thus, on the current state of the record
insufficient evidence exists to determine whether Dr. Malik’s conduct fell below the standard of
care. See id. at 116–18.
The critical fallacy in Lancet’s case, however, is that it chose not to participate in the
litigation at all. As a result, any claim that Dr. Malik’s absence harmed Lancet’s defense is by
definition nothing “more than possible, theoretical, hypothetical, speculative, or conjectural.”
Nat’l Union Fire Ins. Co. of Pittsburgh, PA. v. Fund for Animals, Inc., 451 Md. 431, 454 (2017).
In essence, Lancet’s arguments force the Court to theorize about the possible outcomes regarding
the impact of Dr. Malik’s absence at trial. Compare Trial Tr. 142–44, July 18, 2017 (Artz
Testimony) (conceding uncertainty as to Circuit Court’s possible sanction for Malik’s failure to
cooperate) with Allstate Ins., 363 Md. at 128–30 (emphasizing that trial court’s actual exclusion
of evidence based on Plaintiff’s sanctions motion as evidence of actual prejudice).
Further, Lancet’s argument that Malik’s absence hindered its defense on standard of care
is also belied by its own evidence. Lancet vigorously pressed, through its medical expert,
cardiologist Dr. Richard Schwartz, that the state of the evidence absent Malik would be
insufficient to establish one way or the other whether Malik violated the standard of care, See
Trial Tr., 118, July 18, 2017 (Schwartz Testimony). But Lancet overlooked that this is itself a
ability to defend, and thus settle, on its own behalf. Not being able to settle for the absent Insured does nothing to
undermine its own settlement authority. See Trial Tr., 136–44, July 20, 2017 (Brault Testimony).
credible defense to the Malpractice Lawsuit. Because – according to Lancet – little evidence
exists as to what the doctor did at all, Plaintiff had precious little to sustain its burden that
Malik’s conduct violated the standard of care. Lancet could have certainly defended their claims
on this basis.
On the other hand, Dr. Alec Anders, Plaintiff’s expert on emergency medicine in the
urgent care setting, plausibly testified that the medical records alone provided sufficient evidence
for medical experts to opine on standard of care. See Trial Tr., 39–43, July 18, 2017 (Anders
Testimony). This is so because Dr. Malik made contemporaneous notes reflecting his diagnostic
impressions, course of care, and follow-up plan. See Id. at 43–44. Doctors are trained in
creating such notes and to include in the notes all important information concerning diagnosis,
prognosis, and plan of action. Id. This training is why doctors live by the adage “if it wasn’t
documented, it didn’t happen.” Id. at 44. Moreover, one of the stated purposes of these notes is
so that doctors subsequent to a patient can rely on the information contained in the note to treat
the patient. Id. at 41. Thus, when considered against the backdrop of how doctors are trained to
create and maintain such notes, Dr. Anders’ testimony that Dr. Malik’s notes provide sufficient
basis to opine on standard of care is persuasive. Further, Dr. Anders noted that while factual
gaps may have been filled by interviewing witnesses at the urgent care clinic, other treatment
records, or the autopsy report, none materially alter his ability to opine on standard of care. Id. at
As a result, Lancet failed to sustain its burden of showing that Dr. Malik’s absence in fact
and “in a significant way … precluded or hampered it from presenting a credible defense to the
claim.” Allstate at 128. Quite the opposite, two of Lancet’s experts demonstrated that Lancet
had a viable standard of care defense because the lack of sufficient record evidence rendered
baseless any expert opinion on standard of care. See Trial Tr., 202–05, Jul. 18, 2017 (Schwartz
Testimony); Trial Tr., 162–63, July 18, 2017 (Artz Testimony). Plaintiffs’ expert, by contrast,
persuasively opined that the record evidence was sufficient to render a standard of care opinion.
See Trial Tr., 40–45, July 18, 2017 (Anders Testimony). Accordingly, regardless of which
expert this Court credits, Lancet has not demonstrated Malik’s absence (as opposed to its own
choice not to participate) prejudiced its ability to defend the case.
Perhaps Lancet’s strongest argument for actual prejudice from Malik’s absence is having
to proceed to trial with an “empty chair,” i.e., an absent defendant. See Trial Tr., 112–13, July
18, 2017 (Artz Testimony). The empty chair, asserted Lancet’s expert, would have left the jury
to speculate adversely as to why Malik did not post for his own trial. Id. But again, Lancet
offered no proof of actual prejudice regarding the impact of Malik’s physical absence because
Lancet chose not to defend the claim at all. The Court, therefore, is left with competing expert
testimony as to how the Circuit Court could have handled Malik’s absence rather than how the
Circuit Court did handle it. Compare Trial Tr., 112, July 18, 2017 (Artz Testimony) (opining
that absence could have resulted in default judgment or sanctions) with Trial Tr., 131, July 20,
2017 (Brault Testimony) (opining that court could give cautionary instruction for jury not to
concern themselves with doctor’s physical absence at trial). This expert tit-for-tat amounts to no
more than hypothetical outcomes, not evidence of actual prejudice. Accordingly, Lancet has
shown that any prejudice was derived from Dr. Malik’s absence, but rather from Lancet’s choice
to sit on its hands. As the plaintiff’s expert, Mr. Brault, so aptly stated, “the reason [Lancet]
couldn’t present a defense is because of what [Lancet] did. They did not investigate. They did
not get an expert. They did not attempt to develop a defense. Instead, they did nothing, and the
result under Maryland procedural law at that time is the time had run out and they couldn’t
present [a defense] even if they belatedly got one.” Trial Tr., 133, July 20, 2017 (Brault
Testimony). Indeed, in light of the emphasis that post-Allstate jurisprudence places on
incentivizing insurers to undertake timely investigations before alleging prejudice, see, e.g.,
Prince George’s Cty. v. Local Gov’t Ins. Tr., 388 Md. 162, 187–88 (2005), this Court cannot
endorse Lancet’s abdication of this undertaking in the Malpractice Lawsuit.
For the reasons stated above, judgement will be entered in favor of
Plaintiffs/Counterclaim Defendants Claudia Mora, her two minor children, and her son, Juan
Carlos Castillo. The Court thereby DECLARES that Advanced Walk-In Urgent Care, LLC and
Union Multi Care Medical Center, Inc. are insured by the Lancet Indemnity Risk Retention
Group Professional Liability Insurance Policy # L1201402002735 for the claims asserted against
them in the case Mora v. Advanced Walk-In Urgent Care, LLC, No. 407276-V (Montgomery
Cnty. Cir. Ct. filed July 24, 2015). Lancet is thus liable for the money damages of its Insureds
pursuant to the Policy’s terms. Lancet is not entitled to the declaration sought in its
counterclaim. A separate Order will follow.
United States District Judge
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