In a coverage action successfully handled by our firm, the Appellate Division on Monday issued a published opinion regarding the meaning of the term “employee” in insurance policies. In Gil v. Clara Maass Medical Center, __ N.J. Super. __, __ No. A-4034-14T4 (June 19, 2017), the court unanimously rejected an attempt to graft common law definitions of that term into the policies and, instead, relied exclusively on the plain policy language to determine the issue.
Gil arose out of the medical malpractice claims of an infant child and his mother against an OB/GYN, Dr. Copur, and his company, FirstChoice OB/GYN LLC (“FirstChoice”). Plaintiffs claimed that the infant sustained birth defects as a result of an emergency Caesarian section Dr. Copur performed at Clara Maass Medical Center (“Clara Maass”). FirstChoice was a limited liability company that Dr. Copur and another physician had formed. At the time of the operation, Dr. Copur was acting in accordance with a services agreement between FirstChoice and Clara Maass.
The principal coverage issue concerned whether Dr. Copur was entitled to coverage under Clara Maass’ liability policies, which provided coverage to any “employee” of Clara Maass. The policies contained separate definitions of the term, but both defined an “employee” as a person “paid by” Clara Maass in connection with Clara Maass’ business. It was undisputed that Dr. Copur was not paid by Clara Maass; rather, Clara Maass paid FirstChoice, which paid Dr. Copur.
The court held that the policy language at issue could not be plausibly interpreted to provide coverage to Dr. Copur or FirstChoice and affirmed the trial court’s grant of summary judgment to the insurers. First, the court looked to the plain language of the policies and determined that Dr. Copur was not an “employee” because he was not paid by Clara Maass. In so holding, the court rejected the basic premise of the plaintiffs’ argument, that the court must apply the meanings of “employee” and “independent contractor” that are contained in common law tests, as developed in the context of remedial legislation, such as the workers’ compensation statutes or the Tort Claims Act. The court reasoned that there was no justification for looking outside the policy, especially when construing a contract drafted by sophisticated parties. Rather, the application of such common law tests was inapplicable because the societal interests underlying such remedial statutes are not at play in the context of an insurance policy. The court, therefore, refused to broaden the terms of the policy by resorting to common law principles applied in other circumstances.
Furthermore, the majority went so far as to note that, even if applied, neither the “control test” nor the “relative nature of the work test”, used to determine “employee” status in those other contexts, supported the claim that Dr. Copur was an “employee” under the circumstances presented.
The court also rejected every other argument advanced by the plaintiffs, including that the so-called “catch-all” provision was ambiguous such that FirstChoice could be considered an “affiliated” or “associated” company of Clara Maass; that an underwriter’s testimony established that the “catch-all provision” was ambiguous; and that Dr. Copur was a “leased worker,” as defined, and therefore an “employee” for purposes of the policies.
A concurring opinion explained that, because the issue was one of insurance coverage, the task of ascertaining whether Dr. Copur was an “employee” should focus solely on the policy language. Accordingly, the court should not have considered whether Dr. Copur qualified as an “employee” under common law tests.
Gil is significant because it represents a well-reasoned rejection of an attempt to broaden policy language by reference to common law tests; in this instance for employment status. The court here found that insurance policies are to be interpreted by their own clear terms, not by reference to concepts found in tort or statutory law. The decision may also be important insofar as it rejects the use of an underwriter’s deposition testimony to create an ambiguity in otherwise unambiguous policy language, and as a first interpretation of the defined term “leased worker.”
Feel free to call any member of our team if you have questions concerning this case or its effect on your New Jersey claims.
A copy of the decision is available here.