A federal appeals court is scheduled to hear arguments in a lawsuit brought by a Brandon, Mississippi nursing home that contends its insurer has no legal grounds to back out of defending it in a wrongful death case.
The insurer, Certain Underwriters at Lloyds London, contends that once an employee of the nursing home staff pleaded guilty in the death of a patient, it had no obligation to defend the facility.
A federal judge in Mississippi ruled for Lloyds in 2006.
The 5th Circuit Court of Appeals in New Orleans has placed the case on its July 8 docket.
According to the court record, the family of Brenda Blough filed the wrongful death case against Magnolia Management Corp., owner of the Brandon Court nursing home. The family alleged Blough died on March 26, 2002, at the nursing home because of the failure of the staff to provide adequate care.
Brandon Court and its employees at the time of Blough’s death were insured under a policy of liability insurance issued by Lloyds. Lloyds assumed defense of the lawsuit under a reservation of rights, according to court documents.
In July 2004, after Brandon Court employee Sandra Ball pleaded guilty in the Rankin County Circuit Court to manslaughter by culpable negligence in Blough’s death, Lloyds sought to cancel its defense of the wrongful death case.
Lloyds cited a criminal acts exclusion in its policy with Brandon Court. Lloyd’s argued it was not liable to defend the nursing home against lawsuits resulting from a criminal act.
Brandon Court argued that the guilty plea by Ball did not mean Lloyds could drop its defense of the nursing home itself or the other workers. The nursing home argued that there was insufficient evidence to identify a specific cause of death, and that the evidence did not support a finding that her death was related to any act or omission by Ball.
U.S. District Judge Tom S. Lee disagreed, ruling that Lloyds proved Blough died due to complications from hyperglycemia which were directly attributable to Ball’s failure to provide adequate nursing care.
Lee ruled Lloyds was under no obligation to defend Brandon Court in the wrongful death case.
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