A federal district court of Illinois has ruled that ten lawsuits brought against an anatomical donation company amounted to a single claim under the company's professional liability insurance policy and were subject to the policy's $2 million single claim limit. The case is Lloyds Syndicate 3624 v. Biological Res. Ctr. Of Ill., LLC, No. 18-cv-115, 2018 U.S. Dist. (N.D. Ill. Sep. 19, 2018).
Biological Resource Center of Illinois, LLC (BRCI) was a non-transplant anatomical business from 2007-2015. Non-transplant anatomical businesses deal in human remains to be used for scientific purposes. During the time of operation it received over 1,000 anatomical donations. In 2013 the FBI raided BRCI due to suspicions from family members that had donated their loved ones bodies to BRCI, that their loved ones remains were not being used for appropriate purposes. Ten of these families filed suit against BRCI all alleging that BRCI had unlawfully mishandled or sold body parts.
Each of the complaints alleged that the company induced the plaintiffs or their loved ones to agree to donate remains for medical or scientific purposes, but instead BRCI sold, mishandled, or desecrated the remains. Each complaint also alleged that BRCI breached its duties to the deceased to handle their bodies with respect and to use the remains only for medical or scientific purposes. These suits cited the FBI raid as the time of discovery of the mishandling of the body parts.
BRCI had a professional liability and general liability policy through Lloyds Syndicate 3624 (otherwise, and herein known as Hiscox), who spent more than $2 million on the defense. BRCI and Hiscox argued about the policy language, which stated “the limit of liability for professional liability is $2 million for 'each claim' and $3 million in the aggregate for all claims”.
Hiscox argued that the mishandling of body parts constituted one claim, so the $2 million limit should apply, while BRCI argued that the 10 suits were separate claims so the $3 million aggregate should apply.
The professional liability and general insurance policy in question provided that :All claims based upon or arising out of any and all continuous, repeated, or related Wrongful Acts or Accidents committed or allegedly committed by one or more of the Insureds will be considered a single claim.
The court ruled that the policy language was clear and unambiguous. The court quoted the policy and said “all claims based upon or arising out of any and all continuous, repeated or related wrongful acts or accidents committed or allegedly committed by one or more of the insureds shall be considered a single Claim.” The lawsuits, using various wording, alleged that:
- BCRI promised to use the decedents bodies for education or scientific research;
- BRCI made false representations and breached the duty it undertook when it mishandled or sold the bodies; and
- The plaintiffs discovered BCRI's allegedly wrongful conduct following the police raid.
The district court followed previous Illinois rulings that have stated, “if policy provisions are clear and unambiguous there is no need for construction and the provisions should apply as written.”
BRCI argued that the 10 cases “challenge different anatomical donations involving different gifting documents executed at different times by different persons involving different witnesses and made under different circumstances. The court rejected this argument, finding that BRCI may have sold different decedents' body parts at different times did not make the claims unrelated. The district court continued by saying that each of the underlying cases alleged a specific course of wrongdoing, BRCI's mishandling or sale of body parts, determining that the cases were all “related”.
The $2 million policy limit was exhausted and Hiscox had no further duty to defend or indemnify BRCI under the policy on those cases.
Editor's Note:
The court determined that since the policy language was clear and unambiguous on what constituted a single claim under the applicable policy, the limit for “each claim” was the limit that applied to the ten lawsuits. When courts find language to be ambiguous, they construe the language in favor of the insured, because the insurer writes the policy.