In American Registry of Pathology v. Ohio Cas. Ins. Co., No. 04-1678 (RMC), 2006 WL 3307265 (D.D.C. Nov. 15., 2006), the U.S. District Court for the District of Columbia ruled that facts outside an insurance contract and the allegations in a complaint—even if known by the insured and/or insurer—are not considered relevant to the insurer's duty to defend.

 

Angelica Stevens applied for a job with the Armed Forces Institute of Pathology (AFIP). Due to a hiring freeze, AFIP did not hire her but asked the American Registry of Pathology (ARP) to hire her, as the AFIP can enter into contracts with the ARP for the provision of services and personnel. Stevens worked under the control of AFIP in its Cytology Center , which processes gynecological slides for pathological analysis. ARP was involved in her employment only to the extent that it processed her paychecks, maintained leave balances, and other such administrative tasks.

 

Stevens and ARP were sued by Deborah Sweeney and her husband, alleging that Stevens' negligent analysis of her PAP smear resulted in delayed diagnosis and treatment of cervical cancer. A second lawsuit was also filed by Mary Hatton, executrix of the estate of her sister, Cindy Jill Miller, who died when undetected cancerous cells spread after her PAP smear was allegedly misinterpreted by Stevens.

 

ARP's insurer, Ohio Casualty, denied defense and payment for any judgment for both suits. Both policies that were in effect for these two occurrences contained testing or consulting errors or omissions exclusions. In both of Ohio Casualty's denials under these exclusions, it presumed Stevens was ARP's employee.

 

Applying the eight-corners rule—which looks only to the four corners of the complaint and the four corners of the relevant policy—the court said that Stevens did not meet the definition of “insured” under the policies. Even if Stevens had been ARP's employee, because she was providing professional healthcare services by analyzing the PAP smears, she was not an insured under the policy. However, the court said that the exclusion also applied if Stevens were acting on behalf of an insured, and based on the complaints stating that Stevens was ARP's employee, the court found that Ohio Casualty was correct in applying the testing exclusions.

 

Similarly, the court said that Ohio Casualty was correct in applying the exclusions to a negligent hiring of Stevens claim against ARP. The court said, “There is no question that the eight-corners rule can produce harsh results when a complaint pleads facts, later shown to be false, that trigger an exclusion in the insurance contract. That is why, presumably, some jurisdictions are moving away from strict adherence to the eight-corners rule. But, the District of Columbia is not among them.”

 

The court ruled that Ohio Casualty was entitled to summary judgment.