In a Rule 1:28 decision applying New Hampshire law, the Appeals Court affirmed the entry of summary judgment dismissing a doctor’s suit accusing her professional liability insurer of improper settlement of a claim without her consent. Johnson v. Proselect Ins. Co., 17-P-109.
The underlying trial had resulted in a $5 million judgment against the doctor for medical malpractice, which the trial judge reduced to $4,050,000 based on a pre-trial payment by a co-defendant. Rather than appealing the judgment, the insurer elected to avail itself of its contractual right to settle the claim for $3.75 million, which was within the policy limit, despite the doctor’s objection to the settlement.
With respect to post-judgment settlement negotiations, the insurance policy at issue provided that the insurer:
. . . shall not be obligated to obtain . . . consent to settle . . . [a]fter a jury verdict, judgment or any other ruling . . . establishing . . . liability regardless of whether such verdict, judgment or ruling is subject to appeal or further judicial review.
These provisions created a contractual right on the part of the insurer to settle after a judgment without obtaining the doctor’s consent.
The doctor, who preferred the would-be vindication of an appeal, claimed that the post-judgment settlement caused her reputational harm and emotional distress. In the coverage action that followed, she asserted claims against the insurer for negligence and breach of the implied covenant of good faith and fair dealing.
The Appeals Court held that the doctor’s claims failed as a matter of law for two reasons:
- An insurer’s exercise of a contractual right to settle cannot form the basis for a negligence or breach of the implied covenant of good faith and fair dealing claim against the insurer; and
- The insurer’s conduct (i.e., the post-judgment settlement) did not expose the doctor to any excess personal liability.
Accordingly, the Appeals Court summarily affirmed the trial court’s Memorandum and Order entering summary judgment against the doctor.